The
Sales Tax Act, 1990
(Act No. III of 1951 as Amended by Act VII of 1990)
As amended up to 30th June, 2025
The amendments made through
Finance Act, 2025 have been shown in Red
(Any inadvertent error may kindly be reported for necessary correction to the following telephone contacts of the IR Policy Wing)
Ph: 051-9216840
Contents
Chapter I…………………………………………………………………...7
Preliminary………………………………………………………… …….7
1. Short title, extent and commencement. ............................. ………..7
2. Definitions…………………………………………………… ..7-29
Chapter-II ...................................................................................... ……....29
SCOPE AND PAYMENT OF TAX………………..…………………....29
3. Scope of tax. ...................................................................... ..……..29
3A. Omitted ............................................................................. …..…..35
3AA. Omitted ............................................................................. ..……..35
3AAA. Omitted ............................................................................. …..…..35 3B. Collection of excess sales tax etc. ..................................... ..……..35 4. Zero rating. ........................................................................ ..……..35
5. Change in the rate of tax. .................................................. ..……..37
6. Time and manner of payment. .......................................... …..…..37
7. Determination of tax liability. ........................................... ……....39
7A. Levy and collection of tax on specified goods on value addition....41
8. Tax credit not allowed. ..................................................... ……....42
8A. Joint and several liability of registered persons in supply chain where tax unpaid.-………………………………………………….........44
8B. Adjustable input tax. ......................................................... ……....45 9. Debit and credit note. ........................................................ …..…..46
10. Refund of input tax. .......................................................... ……....46
11. Assessment of Tax and recovery of tax not levied or short levied or
erronously refunded............... ........................................... …..… .48 11A. Short paid amounts recoverable without notice.– ............. ……....50
11B. Assessment giving effect to an order.– ............................. ……....50
11C. Power of tax authorities to modify orders, etc. ................. ……....51 12. Omitted ............................................................................. ……....51
13. Exemption.― .................................................................... ……....51
Chapter-III ..................................................................................... ……....54 REGISTRATION ......................................................................... ………54
14. Registration. – ................................................................... ……....54
14A. Repealed.– ......................................................................... ……....54
14AB. Discontinuance of gas and electricity connections. – ....... ……....55
15. Omitted ............................................................................. ……....55
16. Omitted ............................................................................. ..……..55
17. Omitted ............................................................................. ..……..55
18. Omitted ............................................................................. …..…..55
19. Omitted ............................................................................. ..……..55
20. Omitted ............................................................................. ............55
21. De-registration, blacklisting and suspension of registration….. …55 21A. Active taxpayers list .......................................................... ………56
Chapter-IV .................................................................................... ……....57
BOOK KEEPING AND INVOICING REQUIREMENTS ......... ……....57
22. Records. ............................................................................ ……....57
23. Tax Invoices.- ................................................................... ……....59
24. Retention of record and documents for six years.- ........... ……....61
25. Access to record, documents, etc.- .................................... ……....61
25A. Drawing of samples.- ........................................................ ……....63
25AA. Transaction between Associates ....................................... ……....63
Chapter-V ...................................................................................... ………64 RETURNS .................................................................................... ……....64
26. Return. ............................................................................... ……....64
26A. Omitted ............................................................................. ……....66
26AA. Omitted .............................................................................. ……....66 26AB. Extension of time for furnishing returns ........................... ……....66 27. Special Returns. ................................................................ ……....67
28. Final Return. ..................................................................... ……....67
29. Return deemed to have been made. .................................. ……....67
Chapter-VI .................................................................................... ……....68
APPOINTMENT OF OFFICER OF SALES TAX & THEIR POWERS..68
30. Appointment of Authorities .............................................. ……....68
30A. Directorate General, (Intelligence and Investigation) Inland
Revenue…………….. ....................................................... .......….70
30B. Directorate General Internal Audit. .................................. ……....70
30C. Inland Revenue Services Academy. ................................. ……....70
30CA. Directorate General of Digital Initiatives…………. ……....70
30D. Directorate General of Valuation. ..................................... ………71
30DD. Directorate of Post Clearance Audit . ............................... ………71
30DDD. Directorate General of Input Output Co-efficient Organization..71
30DDDA.Directorate-General of law…………………………………….71
30E. Powers and Functions of Directorate etc. ......................... ………71 31. Powers. .............................................................................. ………71
32. Delegation of powers ........................................................ ………72
32A. Audit by Special Audit Panels ......................................... ………73
32AA. Omitted. ............................................................................. ………74
Chapter-VII ................................................................................... ………75 OFFENCES AND PENALTIES ................................................... ………75
33. Offences and penalties. ..................................................... ………75 33A. Omitted ............................................................................. ………86
34. Default Surcharge. ............................................................ ………86
34A. Exemption from penalty and default surcharge. ............... ………88
35. Omitted. ............................................................................ ………88
35A. Omitted. ............................................................................ ………88
36. Omitted. ............................................................................ ………88
37. Power to summon persons to give evidence and produce documents
in inquiries under the Act. ................................................. ………88
37A. Power to arrest and prosecute ........................................... ………89
37B. Procedure to be followed on arrest of a person. ................ ………90
37C. Special Judges ................................................................... ………93
37D. Cognizance of Offences by Special Judges ...................... ………93
37E. Special Judge, etc. to have exclusive Jurisdiction ............ ………94
37F. Provisions of Code of Criminal Procedure, 1898, to apply……... 95
37G. Transfer of cases ............................................................... ………95
37H. Place of Sittings ................................................................ ………95
37I. Appeal to the High Court .................................................. ………95
38. Authorised officers to have access to premises, stocks, accounts and
records ............................................................................... ………96 38A. Power to call for information. ........................................... ………97
38B. Obligation to produce documents and provide information…….. 97
39. Omitted ............................................................................. ………98
40. Searches under warrant ..................................................... ………98
40A. Omitted. ............................................................................ ………99
40B. Posting of Inland Revenue Officer. .................................. ………99
40C. Monitoring of Tracking by Electronic or other means...................... 99
40D. Provisions relating to goods supplied from tax-exempt areas.-....100
40E. Licensing of brand name.-............................................................100
41. Omitted… ......................................................................... …… .101
42. Omitted. ............................................................................ ……..101
Chapter-VIII .................................................................................. ……..101 APPEALS ..................................................................................... ……..101
43. Omitted. ............................................................................ ……..101
43A. Pecuniary jurisdiction in appeals.………………………..…101-102
44. Omitted. ............................................................................ ……..102
45. Omitted. ............................................................................ ……..102
45A. Power of the Board and Commissioner to call for records………102
45B. Appeals. ............................................................................ ……..103 46. Appeals to Appellate Tribunal. ......................................... …..…106
47. Reference to the High Court.........................................….…106-107 47A. Alternative dispute resolution. .......................................... ...107-108
Chapter-IX .................................................................................... ……..108 RECOVERY OF ARREARS ....................................................... ……..108
48. Recovery of arrears of tax.- .............................................. ……..108
Chapter-X ...................................................................................... ……..110
MISCELLANEOUS ..................................................................... ……..110
49. Sales of taxable activity or transfer of ownership.-- ......... ……..110
49A. Liquidators. ....................................................................... ……..110
50. Power to make rules. ......................................................... ……..112
50A. Computerized system. ....................................................... ……..112
50B. Electronic scrutiny and intimation……………………………....113
51. Bar of suits, prosecution and other legal proceedings. ..... ……..113
52. Appearance by authorised representative. ........................ ……..114 52A. e-intermediaries to be appointed. ...................................... ……..114 53. Estate of deceased person. ................................................ ……..115
54. Estate in bankruptcy. ......................................................... ……..115
55. Removal of difficulties. .................................................... ……..115
56. Service of order, decisions, etc. ........................................ ……..115
56A. Agreement for the exchange of information…………………….117
56AB. Real time access to information and databases………………….118
56B. Disclosure of information by a public servant .............. ……. ….119
56C. Prize schemes to promote tax culture………………………….. 119
57. Rectification of Mistake .................................................... ……..120
58. Liability for payment of tax in the case of private companies or
business enterprises ........................................................... ……..120 58A. Representatives. ................................................................ ……..121
58B. Liability and obligations of representatives. ..................... ……..123 59. Tax paid on stocks acquired before registration ............... ……..124
60. Powers to deliver certain goods without payment of tax .. ……..125
61. Repayment of tax in certain cases. .................................... ……..125
61A. Repayment of tax to persons registered in Azad Jammu and
Kashmir. ............................................................................ ……..125
62. Drawback allowable on re-export.-- ................................. ……..125
63. Drawback on goods taken into use between importation and reexportation. ....................................................................... ……..126
64. Power to declare what goods are identifiable and to prohibit
drawback in case of specified foreign territory ................. ……..126
65. Exemption of tax not levied or short levied as a result of general
practice .............................................................................. ……..126
66. Refund to be claimed within one year. ............................. ……..127
67. Delayed Refund. ............................................................... ……..128 67A. Payment of refund through sales tax refund bonds.. ......... ……..129
68. Liability of the registered person for the acts of his agent. ……..130
69. Issuance of duplicate of sales tax documents. .................. ……..130 70. Computation of limitation period. ..................................... ……..130 71. Special procedure. ............................................................. ……..131
72. Officers of Sales Tax to follow Board's orders, etc. ......... ……..131
72A. Reference to the authorities .......................................... ………...131
72B. Selection of audit by the Board ..................................... ………...132
72C. Reward to Inland Revenue Officers and Officials ........ ………...132
72D. Reward to whistleblowers ............................................. ………...132
73. Certain transactions not admissible. ................................. ……..133
74. Condonation of time-limit. ................................................ ……..135
74A. Validation. ......................................................................... ……..136
75. Application of the provisions of Act IV of 1969 to Sales Tax….136
76. Fee and service charges. ................................................... ……..136
77. Uniform……………. .................................................... …….…..137
SCHEDULES ........................................................................... ………...137
THE FIRST SCHEDULE (omitted)…. ........................................ ……..137
THE SECOND SCHEDULE (omitted) ........................................ ……..137
THE THIRD SCHEDULE ............................................................ ……..137
THE FOURTH SCHEDULE (omitted) ........................................ ……..141
THE FIFTH SCHEDULE ............................................................. ……..141
THE SIXTH SCHEDULE ............................................................ ……..147
THE SEVENTH SCHEDULE (omitted) .................................. ………...222
THE EIGHT SCHEDULE ........................................................ ………...222
THE NINTH SCHEDULE ....................................................... ………...234
THE TENTH SCHEDULE ....................................................... ………...236
THE ELEVENTH SCHEDULE ............................................... ………...239
THE TWELFTH SCHEDULE……………............................................243
THE THIRTEENTH SCHEDULE ........................................... ………...245
The
Sales Tax Act, 1990
[Act No. III of 1951 as Amended by Act VII of 1990]
An Act to consolidate and amend the law relating to the levy of a tax on the sale [, importation, exportation, production, manufacture or consumption] of goods
WHEREAS it is expedient to consolidate and amend the law relating to the levy of a tax on the sale [, importation, exportation, Production, manufacture or consumption] of goods;
It is hereby enacted as follows:-
4[Chapter-I
PRELIMINARY
1. Short title, extent and commencement.― (1) This Act may be called the Sales Tax [...] Act, 1990.
(2) It extends to the whole of Pakistan.
[(3) It shall come into force on such date as the Federal Government may, by notification in the official Gazette, appoint.]
[2. Definitions.― In this Act, unless there is anything repugnant in the subject or context,--
[“(1) “abettor†means a person who intentionally abets or connives in tax fraud as defined in clause (37) of section 2 or in the commission of any offence warranting prosecution under this Act, and includes a person who,–
(a) prepares, or causes to be prepared with authorization of the registered person, invoices for false claim of input tax adjustment; or
(b) allows use of bank account held or operated by him for abetting tax fraud or other offence warranting prosecution under this Act or unauthorizedly or illegally maintains or operates business bank account in other registered person’s name.â€;
(1A) “active taxpayer†means a registered person who does not fall in any of the following categories, namely:-
(a) who is blacklisted or whose registration is suspended [***] in terms of section 21;
(b) fails to file the return under section 26 by the due date for two consecutive tax periods;
(c) who fails to file an Income Tax return under section 114 or
statement under section 115, of the Income Tax Ordinance, 2001(XLIX of 2001), by the due date; and-
(d) who fails to file 11[quarterly] or an annual withholding tax
statement under section 165 of the Income Tax Ordinance, 2001;
(1B) “Appellate Tribunal†means the Appellate Tribunal Inland Revenue established under section 130 of the Income Tax Ordinance, 2001
(XLIX of 2001);]
(2) “appropriate officer†means an [officer of Inland Revenue] authorised by the Board by notification in the official Gazette to perform certain functions under this Act;
[(2A) “arrearsâ€, in relation to a person, means, on any day, the sales tax due and payable by the person under this Act before that day but which has not yet been paid; ]
[(3) “associates or associated persons†shall have the same meaning as defined in section 85 of the Income Tax Ordinance, 2001(XLIX of 2001);]
[(3A) “association of persons†includes a firm, a Hindu undivided family, any artificial juridical person and anybody of persons formed under a foreign law, but does not include a company;]
[(3AA) “banking company†means a banking company as defined in the Banking Companies Ordinance, 1962 (LVII of 1962) and includes anybody corporate which transacts the business of banking in Pakistan;]
[(4) “Board†shall have the same meaning as defined under clause (8) of section 2 of the Income Tax Ordinance, 2001 (XLIX of 2001);]
[“(4A) “Cargo Tracking System†means a digital system notified by the Board for electronic monitoring and tracking of goods transported within or across the territory of Pakistan, for the purpose of tax
enforcement, compliance and prevention of tax evasion;â€;]
[(4AA)] “Chief Commissioner†means a person appointed as the chief Commissioner Inland Revenue under section 30;]
[(4AAA)] “Commissioner (Appeals)†means Commissioner of
Inland Revenue (Appeals) appointed under section 30;]
[(5) “Commissioner†means the Commissioner of Inland Revenue appointed under section 30;]
[(5A) “common taxpayer identification number†means the
registration number or any other number allocated to a registered person;]
[(5AA) “company†means –
(a) a company as defined in the Companies Ordinance, 1984 (XL VII of 1984);
(b) a body corporate formed by or under any law in force in
Pakistan;
(c) a modaraba;
(d) a body incorporated by or under the law of a country outside Pakistan relating to incorporation of companies;
(e) a trust, a co-operative society or a finance society or any other
society established or constituted by or under any law for the time being in force; or
(f) a foreign association, whether incorporated or not, which the Board has, by general or special order, declared to be a company for the purposes of the Income Tax Ordinance 2001
(XLIX of 2001);
23[(5AAA)] “computerized system†means any comprehensive information technology system to be used by the Board or any other office as may be notified by the Board, for carrying out the purposes of this Act;]
24[(5AB) “cottage industry†means a manufacturing concern, which fulfils each of following conditions, namely:−
(a) does not have an industrial gas or electricity connection;
(b) is located in a residential area;
(c) does not have a total labour force of more than ten workers; and
(d) annual turnover from all supplies does not exceed [eight] million rupees;]
[(5ABA) “courier†means any entity engaged in the delivery of goods and collection of cash on behalf of a seller including logistic and ride-hailing services;â€;]
[(5AC)“CREST†means the computerized program for analyzing and cross matching of sales tax returns, also referred to as COMPUTERISED
RISK-BASED EVALUATION of SALES TAX;]
(6) “Customs Act†means the Customs Act, 1969 (IV of 1969), and where appropriate all rules and notifications made under that Act;
[(6A) “defaulter†means a person and, in the case of company or firm, every director, or partner of the company, or as the case may be, of the firm, of which he is a director or partner or a proprietor and includes
guarantors or successors, who fail to pay the arrears;]
[(6B) “default surcharge†means the default surcharge levied under section 34;]
(7) “distributor†means a person appointed by a manufacturer, importer or any other person for a specified area to purchase goods from him for further supply and includes a person who in addition to being a distributor is also engaged in supply of goods as a wholesaler or a retailer;
(8) “document†includes any electronic data, computer programmes, computer tapes, computer disks, micro-films or any other medium for the storage of such data;
(9) “due date†in relation to the furnishing of a return [under section 26], [ [...] [....] means the [15th] day of the month following the end of the tax period, or such other date as the [Board] may, by notification in the official Gazette, specify 16[and different dates may be specified for furnishing of different parts or annexures of the return];
[(9A)] “e-intermediary†means a person appointed as e-intermediary under section 52A for filing of electronic returns and such other documents as may be prescribed by the Board from time to time, on behalf of a person registered under section 14;]
[(9AA) ***]
(9B) “e-bilty†means a digital transport document generated through the Cargo Tracking System as prescribed by the Board, to accompany goods during their movement.â€;
(9C) “e-commerce†means sale or purchase of goods conducted over computer networks by methods specifically designed for the purpose of receiving or placing of orders either through websites, mobile applications or online marketplace having digital ordering features by using mobile phones, automated computer-to-computer ordering system or any similar device;â€;
(10) “establishment†means an undertaking, firm or company,
whether incorporated or not, an association of persons or an individual;
(11) “exempt supply†means a supply which is exempt from tax
under section 13;
[(11A) “FBR Refund Settlement Company 22[10a] Limited†means the company with this name as incorporated under the 23[Companies Act, 2017 (XIX of 2017)], for the purpose of settlement of sales tax and income tax refund claims including payment by way of issuing refund bonds under section 67A’;]
[(11B) “firm†means the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all;]
(12) “goods†include [***] every kind of movable property other than actionable claims, money, stocks, shares and securities;
[“(12A) “green industry†in relation to the entry at serial number
150 of the Table-1 of the Sixth Schedule, means-
(a) a new industrial undertaking which is-
(i) setup on land which not previously been utilised for any commercial, industrial or manufacturing activity and is free from constraints imposed by any prior work;
(ii) built without demolishing revamping, renovating, upgrading, remodeling or modifying any existing structure, facility or plant;
(iii) not formed by the splitting up or reconstitution of an undertaking already in existence or by transfer of machinery, plant or building from an undertaking established in Pakistan prior to commencement of the new business and is not part of an expansion project;
(iv) using any process or technology that has not earlier been used in Pakistan and is so approved by the Engineering Development
Board; and
(b) is approved by the Commissioner on an application made in the prescribed form and manner, accompanied by the prescribed documents and, such other documents as may be required by the Commissioner:
Provided that this definition shall be applicable from the 1st July,
2019 and onwards.â€.]
(13) “importer†means any person who [ ... ] imports any goods into Pakistan;
28[(14) “input taxâ€, in relation to a registered person, means –
(a) tax levied under this Act on supply of goods to the person;
(b) tax levied under this Act on the import of goods by the person;
(c) in relation to goods or services acquired by the person, tax levied under the Federal Excise Act, 2005 in sales tax mode as a duty of excise on the manufacture or production of the goods, or the rendering or providing of the services; [ ]
(d) 31[…….] 32[Provincial Sales Tax levied on services rendered or provided to the person [excluding those services as specified by the Board through notification in the official Gazette subject to such conditions, restrictions and limitations as mentioned therein]; and]
(e) levied under the Sales Tax Act, 1990 as adapted in the State of Azad Jammu and Kashmir, on the supply of goods received by the person;]
[(14A) the expression “KIBOR†means Karachi Inter-Bank Offered Rate prevalent on the first day of each quarter of the financial year;]
[(15) “Local Inland Revenue Office†means the office of
Superintendent of Inland Revenue or such other office as the Board may, by notification in the official Gazette, specify;]
[“(15A) “licensed integrator†means any person licensed by the Board to provide electronic invoicing system for integration of registered persons in the prescribed manner;]
(16) “manufacture†or “produce†includes –
(a) any process in which an article singly or in combination with other articles, materials, components, is either converted into another distinct article or product or is so changed, transformed or reshaped that it becomes capable of being put to use differently or distinctly and includes any process incidental or ancillary to the completion of a manufactured product;
(b) process of printing, publishing, lithography and engraving; and
(c) process and operations of assembling, mixing, cutting, diluting,
bottling, packaging, repacking or preparation of goods in any other manner;
(17) “manufacturer†or “producer†means a person who engages, whether exclusively or not, in the production or manufacture of goods whether or not the raw material of which the goods are produced or manufactured are owned by him; and shall include –
(a) a person who by any process or operation assembles, mixes, cuts, dilutes, bottles, packages, repackages or prepares goods by any other manner;
(b) an assignee or trustee in bankruptcy, liquidator, executor, or curator or any manufacturer or producer and any person who disposes of his assets in any fiduciary capacity; and
(c) any person, firm or company which owns, holds, claims or uses any patent, proprietary, or other right to goods being manufactured, whether in his or its name, or on his or its behalf, as the case may be, whether or not such person, firm or company sells, distributes, consigns or otherwise disposes of the goods [:]
38[Provided that for the purpose of refund under this Act, only such shall be treated as manufacturer-cum-exporter who owns or has his own manufacturing facility to manufacture or produce the goods exported or to be exported;]
[(18) “Officer of Inland Revenue†means an officer appointed under section 30;]
[(18A) “online marketplace†online marketplace†means online interfaces that facilitate, for a fee, the direct interaction between multiple buyers and multiple sellers via digital orders for supply of goods, with or without the platform taking economic ownership of the goods that are being sold;â€;
(19) “open market price†means the consideration in money which that supply or a similar supply would generally fetch in an open market;
[(20) “output taxâ€, in relation to a registered person, means –
(a) tax levied under this Act on a supply of goods, made by the person;
(b) tax levied under the Federal Excise Act, 2005 in sales tax mode as a duty of excise on the manufacture or production of the goods, or the rendering or providing of the services, by the person;
[(c) sales tax levied on the services rendered or provided by the
person under Islamabad Capital Territory (Tax on Services)
Ordinance, 2001 (XLII of 2001);]
(20A) “payment intermediary†means a banking company, any financial institution including a licensed foreign exchange company or payment gateway that facilitate the transfer of funds or payment instructions between two or more parties to enable, process, route, or settle payments with respect to goods in a financial transaction, without being the ultimate source or recipient of the payment;â€;
[(21) “person†means,–
(a) an individual;
(b) a company or association of persons incorporated, formed, organized or established in Pakistan or elsewhere;
(c) the Federal Government;
(d) a Provincial Government;
(e) a local authority in Pakistan; or
(f) a foreign government, a political subdivision of a foreign government, or public international organization;]
(22) “prescribed†means prescribed by rules made under this Act;
[(22A) “Provincial sales tax†means tax levied under, Provincial laws or laws relating to Islamabad Capital Territory, which are declared by the Federal Government, through notification in the official Gazette to be
Provincial Sales Tax for the purpose of input tax;]
(23) “registered office†means the office or other place of business specified by the registered person in the application made by him for registration under this Act or through any subsequent application to the
[Commissioner];
(24) “registration number†means the number allocated to the
registered person for the purpose of this Act;
[(25) “registered person†means a person who is registered or is liable to be registered under this Act:
Provided that a person liable to be registered but not registered under this Act [...] shall not be entitled to any benefit available to a registered person under any of the provisions of this Act or the rules made thereunder;]
49[(26 ) ***]
(27) “retail priceâ€, with reference to the Third Schedule, means the price fixed by the manufacturer 50[or importer, in case of imported goods] [...], inclusive of all 52[duties], charges and taxes (other than sales tax [...]) at which any particular brand or variety of any article [is] sold to the general body of consumers or, if more than one such price is so fixed for the same brand or variety, the highest of such price [:].
56[Provided that the Board may through a general order specify zones or areas for the purpose of determination of highest retail price for any brand or variety of goods [;].]
Provided further that the reduction in price on account of chilling charges or any other similar charges in case of aerated water, beverages, mineral water, or fruit juices shall not be more than five percent of the price inclusive of sales tax, federal excise duty and all taxes other than income tax on which such goods are actually sold to the general body of consumers:
Provided also that, where the Board deems it necessary it may, by notification in the official gazette, fix the retail price of goods specified in the third schedule:
Provided further also that, in case of imported goods specified in the Third Schedule, the retail price shall not be less than one hundred thirty percent of the value determined under section 25 of the Customs Act, 1969 (IV of 1969), including the amount of customs duties and federal excise duty levied thereon.
(28) “retailer†means a person [***] supplying goods to general public for the purpose of consumption [:].
60[Provided that any person, who combines the business of import and retail or manufacture or production with retail, shall notify and advertise wholesale prices and retail prices separately, and declare the address of retail outlets [***].]
[(28A) ***]
(29) “return†means any return required to be furnished under
Chapter-V of this Act;
63[(29A) “sales tax†means – –
(a) the tax, additional tax, or default surcharge levied under this Act;
(b) a fine, penalty or fee imposed or charged under this Act 64[excluding fee and service charges imposed and collected under section 76]; and
(c) any other sum payable under the provisions of this Act or the rules made thereunder;]
[(29AA) “sales tax account†means an account representing the double entry recording of sales tax transactions in the books of account;]
(30) “Schedule†means a Schedule appended to this Act;
(31) “similar supplyâ€, in relation to the open market price of goods, means any other supply of goods which closely or substantially [resembles] the characteristics, quantity, components and materials of the aforementioned goods;
67[(31A) “special audit†means an audit conducted under section 32A;]
(32) “Special Judge†means the Special Judge appointed under Section [37C of the act until such appointment is made by the Special
Judge appointed under section] 185 of the Customs Act;
69[(33) “supply†means a sale or other transfer of the right to dispose of goods as owner, including such sale or transfer under a hire purchase agreement, and also includes –
(a) putting to private, business or non-business use of goods
produced or manufactured in the course of taxable activity for purposes other than those of making a taxable supply;
(b) auction or disposal of goods to satisfy a debt owed by a person; [***]
(c) possession of taxable goods held immediately before a person ceases to be a registered person [; [***]]
73[(d) in case of manufacture of goods belonging to another person, the transfer or delivery of such goods to the owner or to a person nominated by him [; and]
[***]
Provided that the [Board, with the approval of the Federal Ministerin-charge,] may, by notification in the official Gazette, specify such other transactions which shall or shall not constitute supply;]
[(33A) “supply chain†means the series of transactions between buyers and sellers from the stage of first purchase or import to the stage of final supply;]
[(34)] taxâ€, unless the context requires otherwise, means sales tax;]
[(35) “taxable activityâ€, means any economic activity carried on by a person whether or not for profit, and includes – –
(a) an activity carried on in the form of a business, trade or manufacture;
(b) an activity that involves the supply of goods, the rendering or providing of services, or both to another person;
(c) a one-off adventure or concern in the nature of a trade; and
(d) anything done or undertaken during the commencement or termination of the economic activity,
but does not include –
(a) the activities of an employee providing services in that capacity to an employer;
(b) an activity carried on by an individual as a private recreational pursuit or hobby; and
(c) an activity carried on by a person other than an individual
which, if carried on by an individual, would fall within subclause (b).]
(36) “tax fraction†means the amount worked out in accordance with the following formula: –
a
100 + a
('a' is the rate of tax specified in section 3);
[(37) “tax fraud†means knowingly, intentionally, or dishonestly doing any act or abetting any action to cause loss of tax under this Act, including,-
(a) using or preparing false, forged, and fictitious documents, including returns, statements, annexures, and invoices;
(b) false claim of input tax credit based on fictitious
transactions;
(c) issuance of any tax invoice without supply of goods;
(d) tampering with or destroying of any material evidence or documents required to be maintained under this Act or the rules made thereunder;
(e) generating fake input through manipulation of return filing system of the Board and making fake entries in the sales tax returns or in the annexures;
(f) making fictitious compliance of section 73, including routing of payments back to the registered person, or for the benefit of the registered person, through a bank account held by a supplier or a purported supplier;
(g) suppression of supplies that are chargeable to tax under this Act;
(h) making taxable supplies of goods without issuing any tax invoice;
(i) suppression and nonpayment of withholding tax in the prescribed manner beyond a period of three months from due date of payment of tax;
(j) acquisition, possession, transportation, disposal or in any way removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner dealing with, any goods
in respect of which there are reasons to believe that these are liable to confiscation under this Act or the rules made thereunder; or
(k) making of taxable supplies without getting registration under this Act.
[(38) ***]
(39) “taxable goods†means all goods other than those which have been exempted under section 13;
(40) “tax invoice†means a document required to be issued under
section 23;
(41) “taxable supply†means a supply of taxable goods made [...] 83[by an importer, manufacturer, wholesaler (including dealer), distributor or retailer] other than a supply of goods which is exempt under section 13 and includes a supply of goods chargeable to tax at the rate of zero per cent under section 4;
84[(42) ***]
(43) “tax period†means a period of one month or such other period as the 85[Board, with the approval of the Federal Minister-in-charge,] may [, ] by notification in the official Gazette, specify;
[“(43A) [“Tier-1 retailer†means a retailer falling in any one or more of the following categories, namely:-]
(a) a retailer operating as a unit of a national or international chain of stores;
(b) a retailer operating in an air-conditioned shopping mall, plaza or centre, excluding kiosks;
(c) a retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds Rupees [twelve] hundred thousand; 90[ ]
(d)
92[***]
a wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on wholesale basis to the retailers as well as on retail basis to the general body of the consumersâ€;] [ ]
[(f)
a retailer who has acquired point of sale for accepting payment through debit or credit cards from banking companies or any other digital payment service provider authorized by State Bank of Pakistan; [***]
[(g)
[***]
a retailer whose deductible withholding tax under sections 236G or 236H of the Income Tax Ordinance, 2001(XLIX of 2001) during the immediately preceding twelve consecutive months has exceeded the threshold as may be specified by the
Board through notification in the official Gazette; and
[(h)
any other person or class of persons as prescribed by the Board.]
[(44)
“time of supplyâ€, in relation to,–
(a)
a supply of goods, other than under hire purchase agreement, means the time at which the goods are delivered or made available to the recipient of the supply [or the time when any payment is received by the supplier in respect of that supply, whichever is earlier] [****];
(b)
a supply of goods under a hire purchase agreement, means the time at which the agreement is entered into; and
(c) services, means the time at which the services are rendered or provided;
101[Provided that in respect of sub clause ( a) ,(b) or (c), where any part payment is received, –
(i) for the supply in a tax period, it shall be accounted for in the return for that tax period; and
(ii) in respect of exempt supply, it shall be accounted for in the return for the tax period during which the exemption is withdrawn from such supply ;]
(44A) “trust†means an obligation annexed to the ownership of property and arising out of the confidence reposed in and accepted by the owner, or declared and accepted by the owner for the benefit of another, or of another and the owner, and includes a unit trust;
(44AA) “unit trust†means any trust under which beneficial interests are divided into units such that the entitlements of the beneficiaries to income or capital are determined by the number of units held;]
102[(45) ***]
(46) “value of supply†means:--
(a) in respect of a taxable supply, the consideration in money including all Federal and Provincial duties 103[and taxes, if any, which the supplier receives from the recipient for that supply but excluding the amount of tax:
Provided that –
(i) in case the consideration for a supply is in kind or is partly in kind and partly in money, the value of the supply shall mean the open market price of the supply excluding the amount of tax; [ ... ]
(ii) in case the supplier and recipient are associated persons and the supply is made for no consideration or for a consideration which is lower than the open market price, the value of supply shall mean the open market price of the supply excluding the amount of tax; 105[and]
[(iii) in case a taxable supply is made to a consumer from
general public on installment basis on a price inclusive of
mark up or surcharge rendering it higher than open market price, the value of supply shall mean the open market price of the supply excluding the amount of tax.]
(b) in case of trade discounts, the discounted price excluding the amount of tax; provided the tax invoice shows the discounted price and the related tax and the discount allowed is in conformity with the normal business practices;
(c) in case where for any special nature of transaction it is difficult to ascertain the value of a supply, the open market price;
(d) in case of imported goods [excluding those as specified in the Third Schedule], the value determined under section 25 [...] of the Customs Act, including the amount of customsduties and 109[federal] excise duty levied thereon; [...]
(e) in case where there is sufficient reason to believe that the value of a supply has not been correctly declared in the invoice, the value determined by the Valuation Committee comprising representatives of trade and the [Inland Revenue] constituted by the [Commissioner] [;] [ ]
[(f) in case of manufacture of goods belonging to another person,
the actual consideration received by the manufacturer for the value addition carried out in relation to such goods;]
[(g)] in case of a taxable supply, with reference to retail tax, the price of taxable goods excluding the amount of retail tax, which a supplier will charge at the time of making taxable supply by him, or such other price as the Board may, by a notification in the official Gazette, specify.]
[(h) in case of supply of electricity by an independent power producer [or WAPDA], the amount received on account of energy purchase price only; and the amount received on account of capacity purchase price, energy purchase price premium, excess bonus, supplemental charges etc. shall not be included in the value of supply; [***]
(i) in case of supply of electric power and gas by a distribution company, the total amount billed including price of electricity and natural gas, as the case may be, charges, rents, commissions and all duties and taxes local, provincial and federal but excluding the amount of late payment surcharge and the amount of sales tax; [:]
Explanation.- It is clarified that the value of supply does not include the amount of subsidy provided by the federal government or provincial governments to the electricity 121[or natural gas including re-gasified liquefied natural gas] consumers and has never been chargeable to tax under the Act;]
136[(j) in case of registered person who is engaged in purchasing used vehicles from general public on which sales tax had already been paid at the time of import or manufacturing, and which are, later on, sold in the open market after making certain value addition, value of supply will be the difference between sale and purchase price of the said vehicle on the basis of the valuation method prescribed by the Board.]
[Provided] that, where the Board deems it necessary it may, by notification in the official Gazette, fix the value of any imported goods 123[, including those as specified in the Third Schedule,] or taxable supplies or class of supplies and for that purpose fix different values for different classes or description of same type of imported goods or supplies:
Provided further that where the value at which import or supply is made is higher than the value fixed by the Board, the value of goods shall, unless otherwise directed by the Board, be the value at which the import or supply is made;]
[(46A) “whistleblower†means whistleblower as defined in section
72D of the Sales Tax Act, 1990;]
(47) “wholesaler†[includes a dealer and] means any person who carries on, whether regularly or otherwise, the business of buying and selling goods by wholesale or of supplying or distributing goods, directly or indirectly, by wholesale for cash or deferred payment or for commission or other valuable consideration or stores such goods belonging to others as an agent for the purpose of sale; and includes [a person supplying taxable goods to [a person [who deducts income tax at source under the Income
Tax Ordinance, 2001 (XLIX of 2001)]] [...]; and
(48) “zero-rated supply†means a taxable supply which is charged to tax at the rate of zero per cent under section 4.]
Chapter-II SCOPE AND PAYMENT OF TAX
3. Scope of tax.– (1) Subject to the provisions of this Act, there shall be charged, levied and paid a tax known as sales tax at the rate of
130[eighteen] per cent of the value of–
(a) taxable supplies made […] by a registered person in the course or furtherance of any 132[taxable activity] carried on by him; and
(b) goods imported into Pakistan, [irrespective of their final destination in territories of Pakistan].
134[(1A) Subject to the provision of sub section (6) of section 8 or any notification issued thereunder, where taxable supplies are made to a person who has not obtained registration number [or he is not an active taxpayer], there shall be charged, levied and paid a further tax at the rate of [four] percent of the value In addition to the rate specified in sub sections (1), (1B), (2), (5), 137[(6) and section 4] provided that the Federal Govt. may, by notification in the official Gazette, specify the taxable supplies in respect of which the further tax shall not be charged, levied and paid.]
138[(1B) On the goods specified in the Tenth Schedule, in lieu of levying and collecting tax under sub-section (1), the tax shall be levied and collected, in the mode and manner specified therein−
(a) on the production capacity of plants, machinery, undertaking, establishments or installation producing [or] manufacturing such goods; or
(b) on fixed basis, from any person who is in a position to collect such tax due to the nature of the business,
and different rates may be so prescribed for different regions or areas.]
[(2) Notwithstanding the provisions of sub-section (1): –
(a) taxable supplies [and import of goods] specified in the Third Schedule shall be charged to tax at the rate of [eighteen] per cent of the retail price 143[or in case such supplies [or imports] are also specified in the Eighth Schedule, at the rates specified therein and the retail price thereof,] along with the amount of sales tax shall be legibly, prominently and indelibly printed or embossed by the manufacturer 145[, or the importer, in case of imported goods,] on each article, packet, container, package, cover or label, as the case may be; [:] [ ]
[Provided that the Federal Government may, subject to such conditions and restrictions as it may impose, by notification in the official Gazette, declare that the tax on goods specified in the Third Schedule shall be collected and paid at
such higher rate or rates on the retail price thereof, as may be specified in the said notification: and
[Provided [further] that the 151[Board], may, by notification in the official Gazette, exclude any taxable supply [or import] from the said Schedule or include any taxable supply [or import] therein; […]
(aa) [goods specified in the Eighth schedule shall be charged to
tax at such rates and subject to such conditions and limitations as specified therein; and]
[(b) the [Federal Government] may, subject to such conditions and restrictions as it may impose, by notification in the official Gazette, declare that in respect of any taxable goods, the tax shall be charged, collected and paid in such manner and at such higher or lower rate or rates as may be specified in the said notification.]
(3) The liability to pay the tax shall be,-
(a) in the case of supply of goods […], of the person making the supply,
(b) in the case of goods imported into Pakistan, of the person importing the goods, and
(c) in the case of supply of digitally ordered taxable goods by online market place, website and software application from within Pakistan during the course of e-commerce, the liability to collect and pay tax shall be of payment intermediary including a banking company, a financial institution, licensed exchange company or payment gateway in case the payment is made digitally and of the courier delivering the goods where those are supplied on Cash on Delivery (CoD) basis at the rates provided in the Eleventh Schedule.â€;
[(3A) Notwithstanding anything contained in clause (a) of subsection (3), the [Board, with the approval of the Federal Minister-incharge,] may, by a notification in the official Gazette, specify the goods in respect of which the liability to pay tax shall be of the person receiving the supply.]
[(3B) Notwithstanding anything contained in sub section (1) and (3), sales tax on the import and supply of the goods specified in the Ninth Schedule to this Act shall be charged, collected and paid at the rates, in the manner, at the time, and subject to the procedure and conditions as specified therein or as may be prescribed, and the liability to charge, collect and pay the tax shall be on the persons specified therein.]
[(4) ***]
[(5) The [Federal Government] may, in addition to the tax levied under sub-section (1) […], 167[…] sub-section (2) and sub-section (4), levy and collect 168[“tax at such extra rate or amountâ€] not exceeding [eighteen] per cent of the value of such goods or class of goods and on such persons or class of persons, in such mode, manner and at time, and subject to such conditions and limitations as it may, by rules, prescribe.]
170[(6) The Federal Government or [the Board] may, in lieu of the tax under sub-section (1), by notification in the official Gazette, levy and collect such amount of tax as it may deem fit on any supplies or class of supplies or on any goods or class of goods and may also specify the mode, manner or time of payment of such amount of tax.
172[(7) The tax shall be withheld 11[***] at the rate as specified in the Eleventh Schedule, by any person or class of persons [being purchaser of goods or services [, other than the services liable to pay sales tax under a Provincial enactment,] as withholding agent for the purpose of depositing the same, in such manner and subject to such conditions or restrictions as the Board may prescribe in this behalf through a notification in the official
Gazette [:]
[omitted]
(7A) The tax withheld as provided in the Eleventh Schedule by the payment intermediary or the courier, as the case may be, shall be final discharge of tax liability in respect of taxable supplies of digitally ordered goods by;
(i) cottage industry as defined in clause (5AB) of section 2 of this Act; and
(ii) retailers other than tier-I retailersâ€
177[(8) Notwithstanding anything contained in any law or notification made thereunder [, but subject to the provisions of clause (b) of subsection (2)] in case of supply of natural gas to CNG stations, the Gas Transmission and Distribution Company shall charge sales tax from the CNG stations at the rate of [eighteen] per cent of the value of supply to the CNG consumers, as notified by the Board from time to time, but excluding the amount of tax, as provided in clause (46) of section 2.
[(9) Notwithstanding anything contained in sub-section (1), tax shall be charged from retailers, other than those falling in Tier-1, through their monthly electricity bills, at the rate of five percent where the monthly bill amount does not exceed rupees twenty thousand and at the rate of seven and half percent where the monthly bill amount exceeds the aforesaid amount and the electricity supplier shall deposit the amount so collected directly without adjusting against his input tax:
Provided that the tax under this sub-section shall be in addition to the tax payable on supply of electricity under sub-sections (1), (1A) and (5):
Provided further that the Commissioner of Inland Revenue having jurisdiction shall issue order to the electricity supplier regarding exclusion of a person who is either a Tier-1 retailer or not a retailer.]
[(9A) Notwithstanding anything contained in this Act, Tier-1 retailers shall pay sales tax at the rate as applicable to the goods sold under relevant provisions of this Act or a notification issued there under:
[****]
[omitted]
[(9AA) In respect of goods, specified in the Thirteenth Schedule, the minimum production for a month shall be determined on the basis of a single or more inputs as consumed in the production process as per criterion specified in the Thirteenth Schedule and if minimum production so determined exceeds the actual supplies for the month, such minimum production shall be treated as quantity supplied during the month and the liability to pay tax shall be discharged accordingly.]
[(10) *** repealed]
[(11)***]
[(12) Notwithstanding anything contained in this Act, the Federal Government may, in lieu of or in addition to the tax under subsection (9), by notification in the official Gazette, levy and collect such amount of tax at such rates and from such date as it may deem fit, from retailers, other than those falling in Tier-1, through their monthly electricity bill, and may also specify the mode, manner or time of payment of such tax:
Provided that different rates or amounts of tax may be specified for different persons or class of persons.]
[3A. ***]
[3AA. ***]
[3AAA. ***]
[3B. Collection of excess sales tax etc.– (1) Any person who has collected or collects any tax or charge, whether under misapprehension of any provision of this Act or otherwise, which was not payable as tax or charge or which is in excess of the tax or charge actually payable and the incidence of which has been passed on to the consumer, shall pay the amount of tax or charge so collected to the Federal Government.
192[(2) Notwithstanding anything contained in any law or judgement of a court, including the Supreme court and a High court, any amount payable to the Federal Government under sub-section (1) shall be deemed to be an arrear of tax or charge payable under this Act and shall be recoverable accordingly and any claim for refund in respect of such amount shall neither be admissible to the registered person nor payable to any court of law or to any person under direction of the court.]
(3) The burden of proof that the incidence of tax or charge referred to in sub-section (1) has been or has not been passed to the consumer shall be on the person collecting the tax or charge.]
4. Zero rating.– Notwithstanding the provisions of section 3 [except those of sub-section (1A)], 194[...] the following goods shall be charged to tax at the rate of zero per cent:--
[(a) goods exported, or the goods specified in the Fifth Schedule;]
(b) supply of stores and provisions for consumption aboard a
conveyance proceeding to a destination outside Pakistan as specified in section 24 of the Customs Act, 1969 (IV of 1969);
195[(c)
such other goods, as the Federal Government may specify by notification in the official Gazette, whenever circumstances exist to take immediate action for the purposes of national security, natural disaster, national food security in emergency situations and implementation of bilateral and multilateral agreements:â€; and]
[(d) omitted.]
Provided that nothing in this section shall apply in respect of a supply of goods which –
(i) are exported, but have been or are intended to be reimported into Pakistan; or
(ii) have been entered for export under Section 131 of the
Customs Act, 1969 (IV of 1969), but are not exported
197[***] 198[; or]
(iii) [have been exported to a country specified by the Federal Government, by Notification in the official
Gazette [:]
201[Provided further that the Federal Government may, by a notification in the official Gazette, restrict the amount of credit for input tax actually paid and claimed by a person making a zero-rated supply of goods otherwise chargeable to sales tax.]
5. Change in the rate of tax.– If there is a change in the rate of tax-
(a) a taxable supply made [***] by a registered person shall be charged to tax at such rate as is in force at the time of supply;
(b) imported goods shall be charged to“tax at such rate as†is in force,-
(i) in case the goods are entered for home consumption, on the date on a 9[goods declaration] is presented under section 79 of the Customs Act, 1969 (IV of 1969);
(ii) in case the goods are cleared from warehouse, on the date on which a [goods declaration] for clearance of such goods is presented under section 104 of the Customs Act,
1969 (IV of 1969);
Provided that where a 9[goods declaration] is presented in advance of the arrival of the conveyance by which the goods are imported, the tax shall be charged as is in force on the date on which the manifest of the conveyance is delivered:
Provided further that if the tax is not paid within seven days of the of the [goods declaration] [under section 104 of the Customs Act,] the tax shall be charged at the rate as is in force on the date on which tax is actually paid.
6. Time and manner of payment. – (1) The tax in respect of goods imported into Pakistan shall be charged and paid in the same manner and at the same time as if it were a duty of customs payable under the Customs Act, 1969 [and the provisions of the said Act 207[including section 31A thereof], shall, so far as they relate to collection, payment and enforcement [including recovery] of tax under this Act on such goods where no specific provision exists in this Act, apply,].
[(1A) Notwithstanding anything contained in any other law for the time being in force, including but not limited to the Protection of Economic Reforms Act, 1992 (XII of 1992), and notwithstanding any decision or judgment of any forum, authority or court whether passed, before or after the promulgation of the Finance Act, 1998 (III of 1998), the provisions of section 31-A of the Customs Act, 1969 (IV of 1969), referred to in subsection (1) shall be incorporated in and shall be deemed to have always been so incorporated in this Act and no person shall be entitled to any exemption from or adjustment of or refund of tax on account of the absence of such a provision in this Act, or in consequence of any decision or judgment of any forum, authority or court passed on that ground or on the basis of the doctrine of promissory estoppel or on account of any promise or commitment made or understanding given whether in writing or otherwise, by any government department or authority.]
(2) The tax in respect of taxable supplies made [***] during a tax period shall be paid by the registered person 211[by the date as prescribed in this respect] [:]
[Provided that the Board may, by a notification in the Official Gazette, direct that the tax in respect of all or such classes of supplies (other than zero-rated supplies) of all or such taxable goods, as may be specified in the aforesaid notification, shall be charged, collected and paid in any other way, mode, manner or at time as may be specified therein.]
[(3) The tax due on taxable supplies 215[***] shall be paid by any of the following modes, namely:-
(i) through deposit in a bank designated by the Board; and
(ii) through such other mode and manner as may be specified by the Board.]
216[4. ***]
[(5) The Federal Government may, subject to such conditions, limitations and restrictions as it may impose, by notification in the official Gazette, allow payment of sales tax on installments basis by the Federal or Provincial Governments or any public sector organization on import or supply of any goods or class of goods:
Provided that such payment may be allowed from any previous date
specified in the notification under this sub-section.]
7. Determination of tax liability. – (1) [Subject to the provisions of [section 8 and] 8B, for] the purpose of determining his tax liability in respect of taxable supplies made during a tax period, a registered person shall [, subject to the provisions of section 73,] be entitled to deduct input tax 221[paid [or payable [during the tax period for the purpose of taxable supplies made, or to be made, by him] from the output tax [excluding the amount of further tax under sub-section (1A) of section 3.] [ ] that is due from him in respect of that tax period and to make such other adjustments as are specified in Section 9 226[:]
227[Provided that where a registered person did not deduct input tax within the relevant period, he may claim such tax in the return for any of the six succeeding tax periods.]
(2) A registered person shall not be entitled to deduct input tax from output tax unless,-
(i) in case of a claim for input tax in respect of a taxable supply made [***], he holds a tax invoice 229[in his name and bearing his registration number] in respect of such supply [, or in case of supply of electricity or gas, a bill bearing his registration number and the address where the connection is installed] [:]
Provided that from the date to be notified by the Board in this respect, in addition to above, if the supplier has not declared such supply in his return or he has not paid amount of tax due as indicated in his return;
(ii) 232[in case of goods imported into Pakistan, he holds bill of entry or goods declaration in his name and showing his sales tax registration number, duly cleared by the customs under section 79 [, section 81] or section 104 of the Customs Act,
1969 (IV of 1969);]
(iii) 234[in case of goods purchased in auction, he holds a treasury challan, 235[in his name and bearing his registration number,] showing payment of sales tax;]
[(iv) ***]
[(3) Notwithstanding anything in sub-sections (1) and (2), [Board, with the approval of the Federal Minister-in-charge,] may, by a special order, subject to such conditions, limitations or restrictions as may be specified therein allow a registered person to deduct input tax paid by him from the output tax determined or to be determined as due from him under this Act.]
[(4) Notwithstanding anything contained in this Act or rules made there under, the [Federal Government] may, by notification in the official Gazette, subject to such conditions, limitations or restrictions as may be specified therein, allow a registered person or class of persons to deduct such amount of input tax from the output tax as may be specified in the said notification.]
241[(5) Notwithstanding anything contained in this Act or the rules made thereunder, the Board, by notification in the official Gazette, may impose restrictions on wastage of material on which input tax has been claimed in respect of the goods or class of goods.]
[7A. Levy and collection of tax on specified goods on value addition. – [(1) Notwithstanding anything contained in this Act or the rules made there under, the 10[Federal Government] may specify, by notification in the official Gazette, that sales tax chargeable on the supply of goods of such description or class shall, with such limitations or restrictions as may be prescribed, be levied and collected on the difference between the value of supply for which the goods are acquired and the value of supply for which the goods, either in the same state or on further manufacture, are supplied.]
[(2) Notwithstanding anything contained in this Act or the rules made thereunder, in respect of the goods or class of goods specified in the Twelfth Schedule, the minimum value addition tax, against the value added by the registered person, shall be payable, at the rate and by the registered persons or class of registered persons, specified therein, subject to the conditions, limitations, restrictions and procedure specified therein:
Provided that the Federal Government may, through a notification published in the official Gazette, amend any provision of the said Twelfth
Schedule.]
[8. Tax credit not allowed. – (1) Notwithstanding anything contained in this Act, a registered person shall not be entitled to reclaim or deduct input tax paid on –
[(a) the goods 247[or services] used or to be used for any purpose other [***] for taxable supplies made or to be made by him;]
(b)
any other goods or services which the [Federal Government] may, by a notification in the official Gazette, specify250[; [***]]
252[(c)]
[***] the goods under [sub-section] (5) of section 3 [:]
256[(ca)
the goods [or services] in respect of which sales tax has not been deposited in the Government treasury by the respective supplier;]
258[(caa) purchases, in respect of which a discrepancy is indicated by CREST or input tax of which is not verifiable in the supply chain;]
259[(d)
fake invoices; [***]
(e)
purchases made by such registered person, in case he fails to furnish the information required by the Board through a notification issued under sub-section (5) of section 26 [;]
261[(f)
goods and services not related to the taxable supplies made by the registered person.]
[(g) goods and services acquired for personal or non-business consumption;]
[(h) goods used in, or permanently attached to, immoveable property, such as building and construction materials, paints, electrical and sanitary fittings, pipes, wires and cables, but excluding [pre-fabricated buildings and] such goods acquired for sale or re-sale or for direct use in the production or manufacture of taxable goods; [***]]
266[(i) vehicles falling in Chapter 87 of the First Schedule to the Customs Act, 1969 (IV of 1969), parts of such vehicles, electrical and gas appliances, furniture furnishings, office equipment (excluding electronic cash registers), but excluding such goods acquired for sale or re-sale] [;]
[(j) services in respect of which input tax adjustment is barred under the respective provincial sales tax law;
(k) import or purchase of agricultural machinery or equipment
subject to sales tax at the rate of 7% under Eighth Schedule to this Act;
(l) from the date to be notified by the Board, such goods and services which, at the time of filing of return by the buyer, have not been declared by the supplier in his return [or he has not paid amount of tax due as indicated in his return; and
[(m) the input goods 271[or services] attributable to supplies made to un-registered [distributor], on pro-rata basis, for which sale invoices do not bear the NIC number or NTN as the case may be, of the recipient as stipulated in section 23.]
(2) If a registered person deals in taxable and non-taxable supplies, he can reclaim only such proportion of the input tax as is attributable to taxable supplies in such manner as may be specified by the Board.
(3) No person other than a registered person shall make any deduction or reclaim input tax in respect of taxable supplies made or to be made by him.
[(4) ***]
[(5) Notwithstanding anything contained in any other law for the time being in force or any decision of any Court, for the purposes of this section, no input tax credit shall be allowed to the persons who paid fixed tax under any provisions of this Act as it existed at any time prior to the first day of December, 1998.]
[(6) Notwithstanding anything contained in any other law for the time being in force or any provision of this Act, 276[Board, with the approval of the Federal Minister-in-charge,] may, by notification in the official Gazette, specify any goods or class of goods which a registered person cannot supply to any person who is not registered [***] under this Act.]
[(7) ***]
279[8A. Joint and several liability of registered persons in supply chain where tax unpaid.– Where a registered person receiving a taxable supply from another registered person is in the knowledge or has reasonable grounds to suspect that some or all of the tax payable in respect of that supply or any previous or subsequent supply of the goods supplied would go unpaid [, of which the burden to prove shall be on the department] such person as well as the person making the taxable supply shall be jointly and severally liable for payment of such unpaid amount of tax [:]]
[Provided that the Board may by notification in the official gazette, exempt any transaction or transactions from the provisions of this section.]
[8B. Adjustable input tax.– (1) Notwithstanding anything contained in this Act, in relation to a tax period, a registered person [***] shall not be allowed to adjust input tax in excess of ninety per cent of the output tax for that tax period:
285[Provided that the restriction on the adjustment of input tax in excess of ninety percent of the output tax, shall not apply in case of fixed assets or Capital goods:]
Provided further that the Board may by notification in the official Gazette, exclude any person or class of persons from the purview of subsection (1).
(2) A registered person, subject to sub-section (1), may be allowed adjustment 286[or refund] of input tax not allowed under sub-section (1) subject to the following conditions, namely:–
(i) in the case of registered persons, whose accounts are subject to audit under the Companies Ordinance, 1984, upon furnishing a statement along with annual audited accounts, duly certified by the auditors, showing value additions less than the limit prescribed under sub-section (1) above; or
(ii) in case of other registered persons, subject to the conditions and restrictions as may be specified by the Board by notification in the official Gazette.
(3) The adjustment or refund of input tax mentioned in subsections (2), if any, shall be made on yearly basis in the second month following the end of the financial year of the registered person.
(4) Notwithstanding anything contained in sub-sections (1) and (2), the Board may, by notification in the official Gazette, prescribe any other limit of input tax adjustment for any person or class of persons. 287In order to limit input tax allowance, the Board may also use data based automated risk management system to defer certain input tax or fix higher or lower limits of input tax adjustment:
Provided that the registered person may contest the action taken under this sub-section by filing application and documents with the Commissioner concerned, who shall decide the case within thirty days of such application.â€;
286285 Proviso substituted by Finance Act, 2011.Words inserted by Finance Act, 2009.
287 In sub-section (4) after the full stop at the end the Expression added through Finance Act, 2025.
288 [(4A) Notwithstanding anything contained in sub-sections (1), (2) and (3), input tax allowed in case of locally manufactured electric vehicles subject to reduced rate of tax under the Eighth Schedule shall be limited to the extent of amount of output tax and no refund or carry forward of excess input tax shall be allowed.]
(5) Any auditor found guilty of misconduct in furnishing the certificate mentioned in sub-section (2) shall be referred to the Council for disciplinary action under section 20D of Chartered Accountants, Ordinance,
1961 (X of 1961).]
289[(6) In case a Tier-1 retailer does not integrate his retail outlet in the manner as prescribed under sub-section (9A) of section 3, during a tax period or part thereof, the adjustable input tax for whole of that tax period shall be reduced by [60%.]
9. Debit and credit note. – Where a registered person has issued a tax invoice in respect of a supply made by him and as a result of cancellation of supply or return of goods or a change in the nature of supply or change in the value of the supply or some such event the amount shown in the tax invoice or the return needs to be modified, the registered person may, subject to such conditions and limitations as the Board may impose, issue a debit or credit note and make corresponding adjustment against output tax in the return.
[10. Refund of input tax.– (1) If the input tax paid by a registered person on taxable purchases made during a tax period exceeds the output tax on account of zero rated local supplies or export made during that tax period, the excess amount of input tax shall be refunded to the registered person not later than forty-five days of filing of refund claim in such manner and subject to such conditions as the Board may, by notification in the official Gazette specify:
292[Provided that in case of excess input tax against supplies other than zero-rated or exports, such excess input tax may be carried forward to the next tax period, along with the input tax as is not adjustable in terms of sub-section (1) of section 8B, and shall be treated as input tax for that period and the Board may, subject to such conditions and restrictions as it may impose, by notification in the official Gazette, prescribe the procedure for refund of such excess input tax.]
Provided further that the Board may, from such date and subject to such conditions and restrictions as it may impose, by notification in the official Gazette, direct that refund of input tax against exports shall be paid 293[at the fixed rates and in the manner as] notified in the such notification.
(2) If a registered person is liable to pay any tax, default surcharge or penalty payable under any law administered by the Board, the refund of input tax shall be made after adjustment of unpaid outstanding amount of tax or, as the case may, default surcharge and penalty.
(3) Where there is reason to believe that a person has claimed input tax credit or refund which was not admissible to him, the proceedings against him shall be completed within sixty days. For the purposes of enquiry or audit or investigation regarding admissibility of the refund claim, the period of sixty days may be extended up to one hundred and twenty days by an officer not below the rank of an Additional 294[Commissioner Inland Revenue] and the Board may, for reasons to be recorded in writing, extend the aforesaid period which shall in no case exceed nine months.]
[11. ***]
[11A. Short paid amounts recoverable without notice.–
Notwithstanding any of the provisions of this Act, where a registered person pays the amount of tax less than the tax due as indicated in his return, the short paid amount of tax along with default surcharge shall be recovered from such person by stopping removal of any goods from his business premises and through attachment of his business bank accounts, without giving him a show cause notice and without prejudice to any other action prescribed under section 48 of this Act or the rules made thereunder:
Provided that no penalty under section 33 of this Act shall be imposed unless a show cause notice is given to such person.]
297[11B. Limitation for issuing orders in certain cases.— For the purposes of issuing an assessment order or any other order in consequence of or to give effect to any order made by the Commissioner (Appeals), Appellate Tribunal, High Court, or Supreme Court, the provisions of section 124 of the Income Tax Ordinance, 2001 (XLIX of 2001) shall apply mutatis mutandis;]
298[11C. Power of tax authorities to modify orders, etc.– (1) Where a question of law has been decided by a High Court or the Appellate Tribunal in the case of a registered person, on or after first day of July, 1990, the Commissioner or an officer of Inland Revenue may, notwithstanding that he has preferred an appeal against the decision of the High Court or made an application for reference against the order of the Appellate Tribunal, as the case may be, follow the said decision in the case of the said taxpayer in so far as it applies to said question of law arising in any assessment pending before the Commissioner or an officer of Inland Revenue, until the decision of the High Court or of the Appellate Tribunal is reversed or modified.
(2) In case the decision of High Court or the Appellate Tribunal, referred to in sub-section (1), is reversed or modified, the Commissioner or an officer of Inland Revenue may, notwithstanding the expiry of period of limitation prescribed for making any assessment or order, within a period of one year from the date of receipt of decision, modify the assessment or order in which the said decision was applied so that it conforms to the final decision.]
299[11D. Best judgment Assessment. — (1) Where a person, (a) fails to furnish a sales tax return in response to notice under sub-section (2A) of section 26; or
(b) fails to produce before the officer of Inland Revenue not below the rank of Assistant Commissioner under sections 25 or 38A, accounts, documents and records required, or any other relevant document or evidence that may be required by him, the officer of Inland Revenue not below the rank of Assistant
Commissioner may, after a notice to show cause to such person, based on any available information or material and to the best of his judgment, make an
297 Section 11B substituted by Finance Act, 2024.
298299 New section 11C inserted by Finance Act, 2020.New sections 11D to 11G inserted by Finance Act, 2024.
assessment of tax payable or refund due and also charge penalty and default surcharge.
(2) For the purposes of clause (b) of sub-section (1), the officer of Inland Revenue may also disallow or reduce a registered person input tax on goods if the registered person is unable, to provide invoice or other record or evidence of the transaction or circumstances giving rise to such claim.
(3) Where a best judgment assessment has been made due to default of clause (a) of sub-section (1) and the person files the return within sixty days of issuance of order under this section thereafter and pays the amount of tax payable along with default surcharge and penalty, the notice to show cause and the order of assessment shall abate.
(4) Notwithstanding anything in sub-section (1), where the Federal Board of Revenue has specified conditions for the purpose of determination of minimum tax liability in respect of a person who is required to file return but who fails to file such return, the Officer of Inland Revenue shall determine such liability of the registered person in accordance thereof.
300(5) Notwithstanding anything contained in this section, in case of person who is liable to be registered under clause (25) of section 2 based on tax withheld under section 236G of Income Tax Ordinance, 2001 (XLIX of 2001) and does not furnish a return upon notice, an officer of inland revenue may assess sales tax liability on the value addition on reasonable grounds including information obtained from the purchase data under section 236G of Income Tax Ordinance, 2001 (XLIX of 2001).
11E. Assessment of tax and recovery of tax not levied or short levied or erroneously refunded.- 301(1) Where due to any reason, any tax or charge has not been levied or short levied or where the officer of Inland Revenue not below the rank of Assistant Commissioner suspects on the basis of audit or otherwise that due to any reason a person has-
(a) not paid or short paid due sales tax;
(b) claimed input tax credit or refund which is not admissible;
or
(c) has obtained an amount of refund not due,
301300 In In section 11D, after subsection 11E, sub-section (1) is substituted through Finance Act, 2025-section (4) the New sub-section (5) is added through Finance Act, 2025
the officer of Inland Revenue after issuing a show cause notice to the person shall pass an order to determine and recover the amount of tax unpaid or short paid, inadmissible input tax or refund, or unlawful refund obtained and shall also impose penalty and default surcharge in accordance with sections 33 and 34:
Provided that this section shall not be applicable to the extent of proceedings initiated under section 37A of the Act.
(2) For the purposes of sub-section (1), the officer of Inland Revenue may also disallow input tax on goods or services if the taxpayer is unable, without reasonable cause, to provide a receipt, or invoice or other record or evidence of the transaction or circumstances giving rise to such claim.
(3) Where a tax or charge has not been levied under clause (a) of sub-section (1), the amount of tax shall be recovered as tax fraction of the value of supply.
11F. Failure to withhold sales tax.— Where any person, required to withhold sales tax under sub-section (7) of section 3, fails to withhold the tax or having withheld the tax fails to deposit the same in the prescribed manner, the officer of Inland Revenue not below the rank of Assistant Commissioner shall after a notice to such person to show cause pass an order to determine and recover the amount in default and impose penalty and default surcharge under section 33 and 34.
11G. Limitation for assessment.— (1) The show cause notice under sections 11D to 11F shall be issued within five years, from the end of the financial year in which the relevant date falls.
(2) An order under sections 11D, 11E and 11F shall be made within one hundred and [eighty days] of issuance of show cause notice or within such extended period as the Commissioner may, for reasons to be recorded, in writing specify, provided that such extended period shall in no case exceed from ninety days:
Provided that any period during which the proceedings are adjourned on account of a stay order or Alternative Dispute Resolution proceedings or the time taken through adjournment by the registered person not exceeding sixty days shall be excluded from the computation of the period specified in this sub-section.
(3) For the purpose of sections 11D, 11E and 11F, the words “relevant date†means—
(a) the time of payment of sales tax or charge as provided under section 6;
(b) the time of payment for goods or services on which sales tax was to be withheld under sub-section (7) of section 3; and
(c) in a case where sales tax or charge has been erroneously refunded, the date of its refund.]
[12. ***]
[13. Exemption.– (1) Notwithstanding the provisions of section 3, supply of goods or import of goods specified in the Sixth Schedule shall, subject to such conditions as may be specified by the [Federal
Government], be exempt from tax under this Act [.]
[***]
(2) Notwithstanding the provisions of sub-section (1) –
[(a) the Federal Government may, whenever circumstances exist to take immediate action for the purposes of national security, natural disaster, national food security in emergency situations and implementation of bilateral and multilateral agreements, by notification in the official Gazette, exempt any supplies made or imports, of any goods or class of goods from the whole or any part of the tax chargeable under this Act, subject to the conditions and limitations specified therein;]
309[(b) ***]
(3) The exemption from tax chargeable under sub-section (2) may be allowed from any previous date specified in the notification issued under clause (a) [***].]
[(4)
***]
[(5)
***]
313[(6) The [Board] shall place before the National Assembly all
notifications issued under this section in a financial year.
(7) Any notification issued under sub-section (2), after 1st July, 2015 shall, if not earlier rescinded, stand rescinded on the expiry of the financial year in which it was issued 315[:
Provided that all such notifications, except those earlier rescinded, shall be deemed to have been in force with effect from the 1st July, 2016 and shall continue to be in force till the 30th June, 2018, if not earlier rescinded:
Provided further that all notifications issued on or after the first day of July, 2016 and placed before the National Assembly as required under sub-section (6) shall continue to be in force till thirtieth day of June, 2018, if not earlier rescinded by the Federal Government or the National
Assembly.]
Chapter-III REGISTRATION
[14. Registration.— (1) Every person engaged in making taxable supplies in Pakistan, including zero-rated supplies, in the course or furtherance of any taxable activity carried on by him, falling in any of the following categories, if not already registered, is required to be registered under this Act, namely:-
(a) a manufacturer who is not running a cottage industry;
(b) a retailer who is liable to pay sales tax under the Act or rules made thereunder, excluding such retailer required to pay sales tax through his electricity bill under sub-section (9) of section 3;
(c) an importer;
(d) an exporter who intends to obtain sales tax refund against his zero-rated supplies;
(e) a wholesaler, dealer or distributor; and
(f) a person who is required, under any other Federal law or Provincial law, to be registered for the purpose of any duty or tax collected or paid as if it were a levy of sales tax to be collected under the Act.
(1A) Every person including a non-resident person except who is running a cottage industry and the retailers who are required to pay sales tax through electricity bills under sub-section (9) of section 3, selling digitally ordered goods from within Pakistan through online marketplace, website or software application as the case may be, shall apply in the prescribed form and in the prescribed manner for registration.
(1B) Every online marketplace or a courier, involved in e-commerce by supplying digitally ordered goods from within Pakistan shall not allow any person to use their services to carry out e-commerce transactions unless it holds NTN and in case sub-section (1A) of this section applies also holds sales tax registration.
(2) Persons not engaged in making of taxable supplies in Pakistan, if required to be registered for making imports or exports, or under any provisions of the Act, or any other Federal law, may apply for registration.
(2A) If a person, who is required to be registered under the Act, does not apply for registration and the Commissioner Inland Revenue or any other officer, as may be authorized by the Board, after such inquiry as deemed appropriate, having reason to believe that a person is liable to register, he shall compulsorily register such person after providing an opportunity of being heard.
(3) The registration under this Act shall be regulated in such manner as the Board may, by notification in the official Gazette, prescribe.]
319[14A. *** repealed]
320[14AB.Discontinuance of gas and electricity connections.–
Notwithstanding anything contained in this Act or any other law for the time being in force, the Board shall have power through Sales Tax General Order to direct the gas and electricity distribution companies for discontinuing the gas and electricity connections of any person who fall in the following categories, namely:–
(a) Any person, including tier-1 retailers, who fail to register for sales tax purpose or
(b) Notified tier-1 retailers registered but not integrated with the Board’s Computerized System:
Provided that upon registration or integration, as the case may be, of the above said persons, the Board shall notify the restoration of their gas or electricity connection through Sales Tax General Order.]
14AC. Bar on operations of Bank Accounts. – (1) This section shall apply–
(a) where the Commissioner has reasons to believe that a person is engaged in supply of taxable goods
without having registration under this Act;
(b) the Commissioner has provided three consecutive opportunities of being heard to the person to obtain registration under this Act; and
(c) the person has failed to obtain registration.
(2) Notwithstanding anything contained in this Act or any other law for the time being in force, the Commissioner shall have the powers to direct banking companies, scheduled banks and other financial institutions, through an order in writing, to intermittently suspend operation of the bank account of such a person for three working days.
(3) The Commissioner shall repeat suspension specified in subsection (2), for two more times with an interval of one week between the suspensions.
(4) The Commissioner shall direct the banking companies, scheduled banks and other financial institutions, through an order in writing to permanently bar operation of the bank accounts of the person.
(5) Upon registration of such person, the Commissioner shall issue and convey order for removal of bar on operation of his bank accounts not later than two working days.
(6) Any person, aggrieved by any decision or order passed under this section, may within thirty days of the date of receipt of such decision or order prefer an appeal before the Chief Commissioner Inland Revenue.
(7) The provisions of this section shall come into force on such date as the Board may notify in the official Gazette.
14AD. Bar on transfer of Immoveable Property. — (1) Where the person fails to obtain registration within fifteen days from issuance of order under sub-section (4) of section 14AC, the Chief Commissioner shall constitute a committee comprising the Chief Commissioner, Commissioner and one member from the Chamber of Commerce or a Trade Associations, as the case may be.
(2) The committee shall issue a notice to such unregistered person which shall also be prominently displayed at the business premises of the person.
(3) The committee after affording a personal hearing to the person shall either recommend for imposition of bar on transfer of immovable property or recommend the Commissioner to remove the bar imposed under section 14AC.
(4) For imposition of bar on transfer of immovable property, the Committee shall recommend the Commissioner for imposition of bar on transfer of immovable property:
Provided that the Committee shall provide an opportunity to obtain registration within fifteen days prior to the recommendation.
(5) The Commissioner shall have the powers to direct the property registering authority, through an order in writing, to bar transfer of immoveable property of any person who fails to obtain registration after lapse of fifteen days.
(6) Upon registration of such person, the Commissioner shall issue and convey order for removal of bar on transfer of immovable property not later than two working days.
(7) Any person, aggrieved by the decision or order passed may, within thirty days of the date of receipt of such decision or order prefer an appeal before the Chief Commissioner Inland Revenue.
(8) The provisions of this section shall come into force on such date as may be notified by the Board.
14AE. Other measures for non-registration.– (1) Subject to prior action under section 14AC and 14AD, any person who fails to get registered for the purposes of this Act, the Chief Commissioner shall have the powers to--
(a) seal the business premises;
(b) seize moveable property; or
(c) appoint a receiver for the management of the taxable activity of a person.
(2) Action under sub-section (1) shall not be carried out, unless-
(a) a public notice is issued specifying the date from which the premises shall be sealed, or movable property is seized, or a receiver is appointed for the management of the taxable activity;
(b) a committee comprising the Chief Commissioner, the Commissioner concerned and a representative from the Chambers of Commerce or Trade
Associations, provides an opportunity of being heard to the person through an open court; and
(c) such decision is made public by placement on the Board’s website and newspaper as well.
(3) Upon registration, of such person the Chief Commissioner shall reverse the order issued under sub-section (1) not later than two working days.
(4) Any person, aggrieved by any decision or order passed under sub-section (1), may within thirty days of the date of receipt of such decision or order, prefer representation before the Board.
(5) All or any of the provisions of this section shall come into force on such date as the Board may notify in the official Gazette.
[15. ***]
[16. ***]
[17. ***
18. ***
19. ***
20. ***]
[21. De-registration, blacklisting and suspension of registration.– (1) The Board or any officer, authorized in this behalf, may subject to the rules, de-register a registered person or such class of registered persons not required to be registered under this Act.
(2) Notwithstanding anything contained in this Act, in cases where the [Commissioner] is satisfied that a registered person is found to have issued fake invoices [...] or has 328[otherwise] committed tax fraud, he may [issue an order of suspension and blacklisting] such person or suspend his registration in accordance with such procedure as the Board may by notification in the official Gazette, prescribe.]
(2A) The Commissioner shall, within ten days of issuance of order of suspension, issue a show cause notice to the registered person. Upon receipt of the reply to the notice and after giving an opportunity of hearing to the registered person, if the Commissioner is satisfied, he may order for revoking of suspension of the registered person or issue an appealable speaking order for blacklisting of the registered person within thirty days of receipt of the reply to the notice.
331[(3) During the period of suspension of registration, the invoices issued by such person shall not be entertained for the purposes of sales Tax refund or input tax credit, and once such person is black listed, the refund or input tax credit claimed against the invoices issued by him, whether prior or after such black listing, shall [...] be rejected through a self-speaking appealable order and after affording an opportunity of being heard to such person.]
[(4) Notwithstanding anything contained in this Act, where the Board, the concerned Commissioner or any officer authorized by the Board in this behalf has reasons to believe that a registered person is engaged in issuing fake or flying invoices, claiming fraudulent input tax or refunds, does not physically exist or conduct actual business, or is committing any other fraudulent activity, the Board, concerned Commissioner or such Officer may after recording reasons in writing, block the refunds or input tax adjustments of such person and direct the concerned Commissioner having jurisdiction for further investigation and appropriate legal action.]
(5) [….] omitted
[21A. Active taxpayers list.-The Board shall have the power to maintain active taxpayers list in the manner as may be prescribed by rules and such rules may provide for the restrictions and limitations to be imposed on a person who ceases to be an active taxpayer.]
Chapter-IV
BOOK KEEPING AND INVOICING REQUIREMENTS
[22. Records.– (1) A registered person making taxable supplies shall maintain and keep at his business premises or registered office in English or Urdu language the following records of goods purchased [, imported] and supplied (including zero-rated and exempt supplies) made by him or by his agent acting on his behalf in such form and manner as would permit ready ascertainment of his tax liability during a tax period –
(a)
records of supplies made shall indicate the description, quantity and value of goods, name and address of the person to whom supplies were made and the amount of the tax charged;
(b)
records of goods purchased shall show the description, quantity and value of goods, name, address and registration number of the supplier and the amount of the tax on purchases;
[(c)
records of goods imported shall show the description, quantity and value of goods and the amount of tax paid on imports;]
[(d)]
records of zero-rated and exempt supplies;
340[(da) double entry sales tax accounts;]
[(e)] invoices, credit notes, debit notes, bank statements, [banking instruments in terms of section 73,] inventory records,
[utility bills, salary and labour bills, [cash book,] rental
agreements, sale purchase agreements and lease agreements];
[...]
346[(ea) Record relating to Gate passes, inward or outward and transport receipts.]
[(eb)
Electronic version of records mentioned in clauses (a) to (ea) of this sub-section.]
[(f)]
such other records as may be specified by the Board:
349[Provided that the persons paying [...] retail tax shall keep such
record as may be specified by the Board.]
351[(1A) Notwithstanding anything in any other law for the time being in force, the Board may require, by notification in the official Gazette, a registered person or class of registered persons to declare and use only as many number of business bank accounts as may be specified by the Board in such notification to make or receive payments on account of purchase and sale transactions for the purpose of this Act or rules made thereunder and to make payment of due tax from such accounts only.]
(2) The Board may, by notification in the official Gazette, specify for any class of taxable persons or any other person registered under this Act to keep such other records for the purposes of this Act.
352[(2A) The Board may, by notification in the Official Gazette, specify for any class of taxable persons registered under this Act to use such electronic fiscal cash registers as are approved by the Board in the manner as may be prescribed.]
353[(3) The Board may, by notification in the official gazette, prescribe the procedure or software for electronically maintenance of records, filing of sales tax returns or refunds and for any other matter or approve any software for electronic maintenance of records and filing of returns or
refunds by a person or class of such persons.]]
354 [(4) The registered persons, whose accounts are subject to audit under the Companies Ordinance, 1984 (XLVII of 1984), shall be required to submit a copy of the annual audited accounts, along with a certificate by the auditors certifying the payment of due tax by the registered person.]
23. Tax Invoices.– (1) A registered person making a taxable supply shall issue a serially numbered tax invoice at the time of supply of goods containing the following particulars355[, in Urdu or English language,] namely: –
(a) name, address and registration number of the supplier;
[ (b) name, address and registration number of the recipient and in case of supplies by manufacturer or importer to unregistered distributor, the NIC or NTN of such unregistered distributors, as the case may.]
Explanation. – For the purpose of this clause, ordinary consumer means a person who is buying the goods for his own consumption and not for the purpose of re-sale or processing:
Provided that the condition of NIC or NTN shall be effective from 1st August, 2019 [:]
[Provided further that the condition of NIC shall not apply in the case of payment through debit or credit card or digital mode;]
(c) date of issue of invoice;
(d) description [including count, denier and construction in case of textile yarn and fabric,] and quantity of goods;
(e) value exclusive of tax;
(f) amount of sales tax; and
[(ff) ***]
(g) value inclusive of tax:
Provided that the Board may, by notification in the official Gazette, specify such modified invoices [...] for different persons or classes of persons;
Provided further that not more than one tax invoice shall be issued for a taxable supply362[.]
Provided also that where any goods are transported or supplied, the registered person shall ensure the generation and linkage of the tax invoice with the e-Bilty generated under section 40C of this Act and section 83C of the Customs Act, 1969.
[***]
365[(2) No person other than a registered person or a person paying [*** [***]]368[retail tax] shall issue an invoice under this section.
[(3) A registered person making a taxable supply shall, subject to such conditions, restrictions and limitations as the Board may, by notification in the official Gazette, specify to issue electronic invoices.] [(4) The Board may, by notification in the Official Gazette, prescribe the manner and procedure for regulating the issuance and authentication of tax invoices.]
(5) The Board through notification in the official Gazette, may require any person or class of persons to integrate their electronic invoicing system with the Board’s Computerized System for real time reporting of sales in such mode and manner and from such date as may be specified therein.
(6) Licensed integrator shall integrate electronic invoicing system of registered persons referred to in sub-section (5) in such mode and manner as may be prescribed:
Provided that from such date, and in such mode and manner, as prescribed by the Board, all Tier-1 retailers shall integrate their retail outlets with Board’s computerized system for real-time reporting of sales.
[24. Retention of record and documents for [Six] years.– A person, who is required to maintain any record or documents under this Act, shall retain the record and documents for a period of 352[Six] years after the end of the tax period to which such record or documents relate [or till such further period the final decision in any proceedings including proceedings for assessment, appeal, revision, reference, petition and any proceedings before an alternative Dispute Resolution Committee is finalized].]
[25. Audit of sales tax affairs.– (1) The Commissioner on the basis of reasons to be recorded in writing, may direct the officer of Inland Revenue not below the rank of Assistant Commissioner to conduct audit of sales tax affairs of any registered person and issue a notice to such registered person intimating him regarding audit of sales tax affairs.
Explanation.- For the removal of doubt, it is declared that the powers of the Commissioner to direct conduct of audit and to issue a notice under this sub-section are independent of the powers of the Board under section 72B and nothing contained in section 72B restricts the powers of the Commissioner to direct conduct of audit and to issue notice under this sub-section.
(2) The Commissioner shall communicate the reasons referred to in sub-section (1) to the registered person whose audit is to be conducted through the notice under sub-section (1).
Explanation.- For the removal of doubt, it is declared that the Commissioner may not provide an opportunity of hearing before issuance of notice under sub-section (1).
(3) The reasons referred to in sub-section (1) shall be based on scrutiny of the available records including sales tax and federal excise returns, income tax returns and withholding statements, financial statements or third party information:
Provided that the reasons shall not include the mere verification of input tax, output tax, refund claim and compliance of legal provisions without identifying risk factors that require such verification.
(4) Subsequent to the issuance of notice under sub-section (1), the officer of Inland Revenue, may call for any record or documents including record maintained under this Act, the rules made thereunder or any other law for the time being in force for conducting audit of the sales tax affairs of the person. Where such record or documents have been kept on electronic data, the registered person shall allow authorize officer of Inland Revenue access to the use of machine and software on which such data is kept and the officer of Inland Revenue may obtain duly attested hard copies of such information or data from the registered person:
Provided that the officer of Inland Revenue shall not call for record or documents of the registered person after expiry of six years from the end of the financial year to which they relate.
(5) The officer of Inland Revenue may require the registered person to attend his office in person or through an authorized representative. The registered person shall produce such accounts, documents or any evidence as the officer of Inland Revenue may consider necessary.
(6) The officer of Inland Revenue not below the rank of Assistant Commissioner may conduct or cause to be conducted such enquiry and obtain such information from any third party as he considers appropriate.
(7) The officer of Inland Revenue not below the rank of
Assistant Commissioner shall conduct audit of the sales tax affairs to verify the correctness or otherwise of the declared tax liability, output tax, input tax claimed, tax paid, refund claimed, stocks consumed or available for ascertaining compliance or otherwise with the provisions of this Act and the rules made thereunder on the basis of the record and evidence obtained under sub-sections (5) or (6).
(8) The officer of Inland Revenue may conduct audit proceedings electronically through video links, or any other facility as may be prescribed by the Board.
(9) After completion of the audit, the officer of Inland Revenue may, if required pass an order under section 11E, after providing an opportunity of being heard to the registered person under sub-section (1) of section 11E.
(10) Notwithstanding anything contained in sub-sections (7) and (9) where a registered person fails to produce before the officer of Inland 75 Revenue, any accounts, documents or records required to be maintained under this Act or the rules made thereunder or any other relevant document electronically kept record, electronic machine or any other evidence that may be required by the officer of Inland Revenue for the purpose of audit. The officer of Inland Revenue may proceed to make best judgment assessment under section 11D of this Act.
(11) Notwithstanding the penalties prescribed in section 33, if a registered person wishes to deposit the amount of tax short paid or amount of tax evaded along with default surcharge voluntarily, whenever it comes to his notice, before receipt of notice of audit, no penalty shall be recovered from him:
Provided that if a registered person wishes to deposit the amount of tax short paid or amount of tax evaded along with default surcharge during the audit, or at any time before issuance of show cause notice under section 11E, he may deposit the evaded amount of tax, default surcharge under section 34, and twenty five percent of the penalty payable under section 33:
Provided further that if a registered person wishes to deposit the amount of tax short paid or amount of tax evaded along with default surcharge after issuance of show cause notice under section 11E, he shall deposit the evaded amount of tax, default surcharge under section 34, and full amount of the penalty payable under section 33 and thereafter, the show cause notice, shall stand abated.]
[25A. Drawing of samples.– Where an authorized officer of [Inland Revenue] considers it necessary to take a sample of any goods or raw materials, for the purpose of determining their liability to sales tax or for the purpose of establishing their value or for any other reason, he may remove a minimum quantity of goods or raw materials sufficient to enable a proper examination or analysis to be made. At the time of taking the sample the person in possession of the goods shall be informed and given the opportunity to sign the representative samples, so drawn, and take a corresponding sample for his record. Any sample taken under this section shall be taken against a proper receipt a copy each of which shall be kept in the record by the registered person and the [Large Taxpayers Unit or Regional Tax Office, as the case may be].]
[25AA. Transactions between Associates.– 6[(1)] The Commissioner or an office of Inland Revenue may, in respect of any transaction between persons who are associates, determine the transfer price of taxable supplies between the persons as is necessary to reflect the fair market value of supplies in an arm’s length transaction.]
[(2) The Board may, by notification in official gazette, prescribe
rules for carrying out the purpose of sub-section (1).]
Chapter-V
RETURNS
381[26. 382[***] Return.– (1) Every registered person [...] shall furnish not later than the due date a true 384[, complete] and correct return in the prescribed form to a designated bank [or any other office] specified by the Board, indicating the purchases and the supplies made during a tax period, the tax due and paid and such other information, as may be prescribed [;]
387[Provided that the Board may, by notification in the official Gazette, require any person or class of persons to submit return on quarterly basis:
Provided further that the Board may, by notification in the official Gazette, require any person or class of persons to submit such return as may be prescribed annually in addition to the monthly return or quarterly return:
Provided also that the return filed electronically on the web or any magnetic media or any other computer readable media as may be specified by the Board shall also be deemed to be a return for the purpose of subsection (1) and the Board may, by notification in the official Gazette, make rules for determining eligibility of the data of such returns and eintermediaries who will digitize the data of such returns and transmit the same electronically under their digital signatures [;]
Provided also that every online marketplace shall furnish not later than the due date a true, complete and correct monthly statement in the prescribed form, indicating the supplier-wise amount paid and tax due and such other information of the taxable supplies of digitally ordered goods irrespective of the economic ownership of the supplies from within Pakistan:
Provided further also that every payment intermediary and courier shall furnish not later than the due date a true, complete and correct monthly statement in the prescribed form, indicating the supplier-wise amount paid and tax due and such other information for taxable supplies of digitally ordered goods from within Pakistan through an online market place, website and software application and delivering goods using its payment platform or courier service as the case may be.
[...]
(2) [....] omitted
[(2A) The officer of Inland Revenue may, by notice in writing, require any person who, in his opinion, is required to file a return under this section for a tax period or tax periods but who has failed to do so, to furnish the return or returns within fifteen days from the date of service of such notice or such longer or shorter period as may be specified in such notice or as the officer of Inland Revenue may allow:
Provided that the notice under this sub-section shall only be issued within fifteen years from the end of the financial year in which the return was to be filed, in cases of tax fraud and five years in all other cases.]
[(3) A registered person may, subject to approval of the 393[Commissioner Inland Revenue] having jurisdiction, file a revised return within [one hundred and twenty] days of the filing of return under subsection (1) or, as the case may be, sub-section (2), 395[ or under clause (a) or clause (b) of section 27], to correct any omission or wrong declaration made therein [.]
[omitted]
397(3A) Unless restricted by the compliance risk management system of the Board, the approval under sub-section (3), shall not be required if revised return is filed within sixty days of filing of return and the tax payable therein is more than the amount paid or the refund claimed therein is less than the amount as claimed, under the return sought to be revised.
398[(4) Notwithstanding the penalties prescribed in section 33, if a registered person wishes to file revised return voluntarily along with deposit of the amount of tax short paid or amount of tax evaded along with 399[default surcharge], whenever it comes to his notice, before receipt of notice of audit, no penalty shall be recovered from him:
Provided that in case the registered person wishes to deposit the amount of tax as pointed out by the officer of [Inland Revenue] during the audit, or at any time before issuance of the show cause notice [...], he may deposit the evaded amount of tax, [default surcharge] under section
(34), and twenty five percent of the penalty payable under section 33 along with the levied return:
Provided further that in case the registered person wishes to deposit the amount after issuance of show cause notice, he shall deposit the evaded amount of sales tax [...], [default surcharge] under section 34, and full amount of leviable penalty under section 33 along with the revised return and thereafter, the show cause notice, shall stands abated.]
404[(5) The Board may, by notification in the official Gazette, require any person or class of persons, for any goods of such description or class, to furnish such summary or details or particulars pertaining to the imports, purchases and supplies during any tax period or periods, in such format as may be specified.]
[26A. ***]
[26AA. ***]
[26AB. Extension of time for furnishing returns. (1) A registered person required to furnish a return under section 26 may apply, in writing, to the Commissioner for an extension of time to furnish the return.
(2) An application under sub-section (1) shall be made by the due date for furnishing the return in terms of section 2(9) for the period to which the application relates.
(3) Where an application has been made under sub-section (1) and the Commissioner is satisfied that the applicant is unable to furnish the return to which the application relates by the due date because of–
(a) absence from Pakistan;
(b) sickness or other misadventure; or
(c) any other reasonable cause,
the Commissioner may, by order in writing, grant the applicant an extension of time for furnishing the return.
(4) An extension of time under sub-section (3) shall not exceed fifteen days from the due date for furnishing the return, unless there are exceptional circumstances justifying a longer extension of time:
Provided that where the Commissioner has not granted extension for furnishing the return under sub-sections (3) or (4), the Chief Commissioner may on an application made by the registered person for extension or further extension, as the case may be, grant extension or further extension for a period not exceeding fifteen days, unless there are exceptional circumstances justifying a longer extension of time.
(5) An extension or further extension of time granted under subsections (3) or (4), as the case may be, shall not, for the purpose of charge of default surcharge under section 34, change the due date for payment of sales tax under section 6.]
[27. Special Returns.– In addition to the return specified under section 26 –
(a) a person registered [ [ ] under this Act] shall furnish special return within such date and in such form indicating information such as quantity manufactured or produced, purchases made, goods supplied or payment of arrears made, etc, for such period as the Board may, by a notification in official gazette, specify; and
(b) the [commissioner] may require any person whether, registered or not, to furnish a return (whether on his own behalf or as an agent or trustee) in a prescribed form and such person shall furnish the return not later than the date specified in this regard.]
412[28. Final Return.– If a person applies for de-registration in terms of section 21, he shall before such de-registration, furnish a final return to the [commissioner] in the specified form in such manner and at such time as directed by the [commissioner]].
29. Return deemed to have been made.– A return purporting to be made on behalf of a person 415[by his duly appointed representative] shall, for all purposes, be deemed to have been made by such person or under his authority unless proved to the contrary.
Chapter-VI
APPOINTMENT OF [OFFICERS OF SALES TAX] & THEIR POWERS
[30. Appointment of Authorities.– (1) For the purposes of this Act, the Board may, appoint in relation to any area, person or class of persons, any person to be –
(a) a chief commissioner of Inland Revenue;
(b) a commissioner of Inland Revenue ;
(c) a commissioner of Inland Revenue (Appeals);
(d) an Additional commissioner of Inland Revenue ;
(e) a Deputy commissioner of Inland Revenue;
[(ea) District Taxation Officer Inland Revenue;]
(f) an Assistant commissioner of Inland Revenue;
[(fa) Assistant Director Audit Inland Revenue;]
(g) an Inland Revenue Officer;
(h) a Superintendent Inland Revenue;
(i) an Inland Revenue Auditor Officer [...];
[(ia) an inspector Inland Revenue; and]
(j)an officer of Inland Revenue with any other designation.
(2) The Chief Commissioner Inland Revenue and Commissioner Inland Revenue (Appeals) shall be sub-ordinate to the Board and Commissioner Inland Revenue shall be sub-ordinate to the Chief Commissioner Inland Revenue.
422[(2A) The Chief Commissioners Inland Revenue shall perform their functions in respect of such persons or classes of persons or such areas as the Board may direct.
5(2B) The Commissioners Inland Revenue shall perform their functions in respect of such persons or classes of persons or such areas as the Chief Commissioner, to whom they are sub-ordinate, may direct.]
(3) Additional Commissioner Inland Revenue, Deputy
Commissioners Inland Revenue 423[, District Taxation Officer Inland Revenue], Assistant Commissioner Inland Revenue 6[, Assistant Director Audit Inland Revenue], Superintendent Inland Revenue, Inland Revenue Audit Officer, Inland Revenue Officer [, Inspector Inland Revenue], and officer of Inland Revenue with any other designation shall be sub-ordinate to the Commissioner Inland Revenue and shall perform their functions in respect of such persons or classes of persons or such areas as the Commissioners, to whom they are sub ordinate, may direct.
(4) Deputy Commissioner Inland Revenue [, District Taxation Officer Inland Revenue], Assistant Commissioner Inland Revenue 1[, Assistant Director Audit Inland Revenue], Superintendent Inland Revenue, Inland Revenue Audit Officer, Inland revenue Officer, [Inspector Inland Revenue Officer] an officer of Inland Revenue with any other designation shall be sub-ordinate to the Additional Commissioner Inland Revenue.]
427[30A. Directorate General (Intelligence and Investigation), Inland Revenue.–(1) The Directorate General (Intelligence and Investigation) Inland Revenue shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and such other officers as the Board may, by notification in the official Gazette, [appoint].
(2) The Board may, by notification in the official Gazette,–
(a) specify the functions and jurisdiction of the Directorate
General and its officers; and
(b) confer the powers of authorities specified in section 30 upon the Directorate General and its officers.]
[30AB. Tax Fraud Investigation Wing Inland Revenue.– (1) There shall be established a wing to be known as Tax Fraud Investigation Wing-Inland Revenue.
(2) The functions of the tax fraud Investigation Wing Inland Revenue shall be to detect, analyze, investigate, combat and prevent tax fraud.
(3) The tax fraud Investigation Wing Inland Revenue shall comprise Fraud Intelligence and Analysis Unit, Fraud Investigation Unit, Legal Unit, Accountants Unit, Digital Forensic and Scene of Crime Unit, Administrative Unit or any other Unit as may be notified by the Board through notification in the official Gazette.
(4) The tax fraud Investigation Wing Inland Revenue shall consist of a Chief Investigator and as many following officers, as may be notified by the Board-
(a) Senior investigators, investigators, Junior investigators or any other officer of Inland Revenue with any other designation;
(b) a Senior Forensic Analyst and as many Forensic Analysts and Junior Forensic Analysts; and
(c) a Senior Data Analyst and as many Data Analysts and Junior Data Analysts.
(5) The Board may, by notification in the official Gazette, --
(a) specify the functions and jurisdiction of the Tax Fraud Investigation Wing Inland Revenue and its
Units and its officers; and
( b) confer the powers of authorities specified in section 30 upon the tax fraud Investigation Wing Inland
Revenue and its officers at clause (a) of sub-section
4.
(6) Nothing contained in this section shall prevent the authorities appointed under section 30 or any other authority or officer conferred with the power and functions of authorities appointed under section 30 from conducting investigation and prosecution proceedings under Chapter-VII of the Act.]
430[30B. Directorate General 431[...] Internal Audit.– The Directorate General 2[...] Internal Audit shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and such other officers as the Board, may by notification in the official Gazette, appoint.
[30C. [Inland Revenue Services Academy].--The [Inland Revenue Services Academy] shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and such other officers as the Board, may by notification in the official Gazette, appoint.
435[30CA. Directorate General of Digital Initiatives.-- The
Directorate General of Digital Initiatives shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and such other officers as the Board may, by notification in the official Gazette, appoint.]
436[30D. Directorate General of Valuation [...].--The Directorate General of Valuation 5[...] shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and such other officers as the Board, may by notification in the official Gazette, appoint.
[30DD. Directorate of Post Clearance Audit.– The Directorate of
Post clearance Audit shall consist of a Director and as many Additional Directors, Deputy Directors, Assistant Directors and such other officers as the Board may, by notification in the official Gazette, appoint.] [30DDD. Directorate General of Input Output Co-efficient Organization.- The Directorate General of Input Output Coefficient Organization (IOCO)-Inland Revenue shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors and such other officers as the Board may, by notification in the official Gazette, appoint.]
[30DDDA. Directorate-General of law.- (1) The Directorate-General of law shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors, Law Officers and such other officers as the Board may, by notification in the official Gazette, appoint. (2) The Board may, by notification in the official Gazette, specify the functions, jurisdiction and powers of the Directorate-General of law.]
441[30E. Powers and Functions of Directorate, etc.– The Board may, by notification in the official Gazette, specify the functions, jurisdiction and powers of the Directorates General as specified in the preceding sections and their officers by notification in the official Gazette.]
31. Powers.– An officer of [Inland Revenue] appointed under section 30 shall exercise such powers and discharge such duties as are conferred or imposed on him under this Act; and he shall also be competent to exercise all powers and discharge all duties conferred or imposed upon any officer subordinate to him:
Provided that, notwithstanding anything contained in this Act or the rules, the Board may, by general or special order, impose such limitations or conditions on the exercise of such powers and discharge of such duties as it deems fit.
443[32. Delegation of powers.– [(1) The Board or the Chief Commissioner, with the approval of the Board, may, by an order and subject to such limitations or conditions as may be specified therein, empower by name or designation –
2010
[(a) any Additional Commissioner Inland Revenue or Deputy Commissioner Inland Revenue to exercise any of the powers of a Commissioner Inland Revenue under this Act; and
(b) any Deputy Commissioner Inland Revenue or Assistant
Commissioner Inland Revenue to exercise any of the powers of an Additional Commissioner Inland Revenue under this Act;
(c) any Assistant Commissioner Inland Revenue to exercise any of
the powers of a Deputy Commissioner Inland Revenue under this Act; and
(d) any other officer of Inland Revenue to exercise any of the
powers of an Assistant Commissioner Inland Revenue under this Act.]
[(2) ***]
(3) The officer to whom any powers are delegated under this
section shall not further delegate such powers.]
446[32A. [Audit by Special Audit Panels]. [(1) The Board may appoint as many special audit panels as may be necessary, comprising two or more members from the following, –
(a) an officer or officers of Inland Revenue;
(b) a firm of chartered accountants as defined under the Chartered Accountants Ordinance, 1961 (X of 1961);
(c) a firm of cost and management accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966); or
(d) any other person as directed by the Board,
to conduct audit of a registered person or persons, including audit of refund claims and forensic audit and the scope of such audit shall be determined by the Board or the Commissioner Inland Revenue on a case-to-case basis. In addition, the Board may, where it considers appropriate, also get such audit conducted jointly with similar audits being conducted by provincial administrations of sales tax on services.]
(2) Notwithstanding that records of a registered person have been audited by an officer appointed under section 30, the Board or a [Commissioner] may direct [special audit panel] appointed under subsection (1) to audit the records of any registered person.
(3) [Every member of special audit panel] appointed under subsection (1), shall have the powers of an officer of [Inland Revenue] under sections 25, 37 and 38.
[(4) Each special audit panel shall be headed by a chairman who shall be an officer of Inland Revenue.
(5) If any one member of the special audit panel, other than the chairman, is absent from conducting an audit, the proceedings of the audit may continue and the audit conducted by the special audit panel shall not be invalid or be called in question merely on the ground of such absence.
(6) The Board may prescribe rules in respect of constitution, procedure and working of special audit panel.]
[32AA. ***]
32B. Appointment of experts and auditors. — (1) The Board or the Commissioner may appoint as many experts as it or the Commissioner considers necessary for the purposes of this Act, including for the purposes of assistance in audit, investigation, litigation or valuation.
(2) The Board may appoint as many auditors as it may deem fit, through direct engagement or through a third party including a pay roll firm for the purposes of this Act, and confer such powers as may be deemed necessary to assist the authorities mentioned in clauses (a) to (f) of sub-section (1) of section 30 of this Act and clauses (a) to (f) of sub-section (1) of section 29 of the Federal Excise Act, 2005, as per the terms, conditions, limitations and restrictions as may be prescribed.
Chapter-VII
456[OFFENCES, PENALTIES AND PUNISHMENT]
[33. Offences, Penalties and Punishment.– 457[...] Whoever commits any offence described in column (1) of the Table below shall, in addition to and not in derogation of any punishment to which he may be liable under any other law, be liable to the penalty mentioned against that offence in column (2) thereof: –
TABLE
Offences Penalties 458[and Punishment] Section of the Act to which offence has reference
(1) (2) (3)
1. Where any person fails to furnish a return within the due date. Such person shall pay a penalty of 459[ten] thousand rupees:
Provided that in case a person files a return within 460[ten] days of the due date, he shall pay a penalty of 461[two] hundred rupees for each day of default. 26
4621A.Where any online marketplace, payment intermediary or courier fails to furnish prescribed monthly statement within due
date Such person shall be liable to pay:
(i) Penalty of three lac rupees for the first default if he fails to furnish the prescribed statement for two consecutive
months;
(ii) Penalty of one million rupees for each subsequent default within one year. 26
1B. Where any online marketplace, courier allow use of its services in the course of e- Such person shall be liable to pay:
(i) Penalty of five lac rupees for first default; 14
456 marginal heading substituted through Finance Act, 2025.
457 Bracket and figure “one†omitted by Finance Act, 2008.
458 in section 33, in the Table, in column (2), after the expression “Penaltiesâ€, the expression “and Punishment†inserted through Finance Act, 2025.
459 Substituted for the word “five†by Finance Act, 2019..
460 Substituted for the word “fifteen†by Finance Act, 2015.
461 Substituted for the word “one†by Finance Act, 2019.
462 after S. No. 1, new S. No. 1A and 1B entries relating thereto in columns (1), (2) and (3) is inserted through Finance Act, 2025.
Offences Penalties 458[and Punishment] Section of the Act to which offence has reference
(1) (2) (3)
commerce by
unregistered persons (ii) Penalty of one million rupees for each subsequent default.
2. Any person who fails to issue an invoice when required under this Act. Such person shall pay a penalty of five thousand rupees or three per cent of the amount of the tax involved, whichever is higher. 23
3. Any person who un-
authorizedly issues an invoice in which an amount of tax is specified. Such person shall pay a penalty of ten thousand rupees or five per cent of the amount of t he tax involved, whichever is higher.
3, 7 and 23
4. Any person who fails to notify the changes of material nature in the particulars of registration of taxable activity. Such person shall pay a penalty of five thousand rupees. 14
5. Any person who fails to deposit the amount of tax due or any part thereof in the time or manner laid down under this Act or rules or orders made there under. Such person shall pay a penalty of ten thousand rupees or five per cent of the amount of the tax involved, whichever is higher:
Provided that, if the amount of tax or any part thereof is paid within [ten] days from the due date, the defaulter shall pay a penalty of five hundred rupees for each day of default:
Provided further that no penalty shall be imposed when any miscalculation is made for the first time during a year:
Provided further that if the amount of tax due is not paid even after the expiry of a period of sixty days of issuance of the notice for such payments by an officer of
[Inland Revenue, not below the rank of Assistant Commissioner Inland Revenue], the defaulter shall, further be liable, upon conviction by a Special Judge, to 3, 6, 7 and 48
Offences Penalties 458[and Punishment] Section of the Act to which offence has reference
(1) (2) (3)
imprisonment for a term which may extend to three years, or with fine which may extend to amount equal to the amount of tax involved, or with both.
6. Any person who repeats erroneous calculation in the return during a year whereby amount of tax less than the actual tax due is paid. Such person shall pay a penalty of five thousand rupees or three per cent of the amount of the tax involved, whichever is higher.
7 and 26
7. Any person who is required to apply for registration under this Act fails to make an application for registration before making taxable supplies. Such person shall pay a penalty of ten thousand rupees or five per cent of the amount of tax involved, whichever is higher:
Provided that such person who is required to get himself registered under this Act, fails to get registered within sixty days of the commencement of taxable activity, he shall, further be liable, upon conviction by a Special Judge, to imprisonment for a term which may extend to three years, or with fine which may extend to an amount equal to the amount of tax involved, or with both.
14
8. Any person who fails to maintain records required under this Act or the rules made there under. Such person shall pay a penalty of ten thousand rupees or five per cent of the amount of tax involved, whichever is higher. 22 and 24
9. Where a registered person who, without any reasonable cause, in non compliance with the provisions of section 25,
– –
(a) fails to produce the record on receipt of
first notice;
such person shall pay a penalty of five thousand rupees;
such person shall pay a penalty of ten thousand rupees; and
such person shall pay a penalty of fifty thousand rupees.
25
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